Maddox Specialty Company, a division of Lost World Inc., manufactures three mode

Question

Maddox Specialty Company, a division of Lost World Inc., manufactures three models of gear shift components for bicycles that are sold to bicycle manufacturers, retailers, and catalog outlets. Since beginning operations in 1990, Maddox has used normal absorption costing and has assumed a first-in, first-out cost flow in its perpetual inventory system. The balances of the inventory accounts at the end of Maddox’s fiscal year, November 30, 2014, are shown below. The inventories are stated at cost before any year-end adjustments.

The following information relates to Maddox’s inventory and operations.

1. The finished goods inventory consists of the items analyzed below.

Cost

Market

(a)

Prepare the inventory section of Maddox’s balance sheet as of November 30, 2015. (Round answers to 0 decimal places, e.g. 2,550.)

Explanation / Answer

Finished goods $675,920 Work in process 123200 Raw materials 271900 Factory supplies 74300 Cost Market Down tube shifter: Standard model $73,000 72400 Click adjustment model 95740 91340 Deluxe model 115600 112500 Total down tube shifters $284,340 $276,240 Bar end shifter: Standard model 84880 92150 Click adjustment model 102800 100900 Total bar end shifters 187680 193050 Head tube shifter: Standard model 78500 78000 Click adjustment model 125400 127900 Total head tube shifters 203900 205900 Total finished goods $675,920 $675,190 Finished Goods LCM schedule Cost Market Lower of cost or market value Down tube shifter 284340 276240 276240 Bar end shifer 187680 193050 187680 Head tube shifter 203900 205900 203900 Total 675920 675190 667820 Work-in-Process LCM schedule Cost Market Work-in-Process inventory 123200 117060 Point 5 Raw Materials LCM schedule Cost Market LCM Derailleurs at cost 135950 Derailleurs at market 113292 (135950/ 1.2) Remaining raw materials 135950 135600 point 4 Total 271900 248892 248892 Supplies LCM schedule Cost Market LCM Supplies account balance 74300 less Obsolete supples -4280 point 6 net supples 70020 71300 70020 Current assets Amount $ Inventory Section Finished goods 667820 Work-in-process 117060 Raw materials 248892 Factory supplies 70020 Total inventories $1103792

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