X Your answer is incorrect. Try again Grouper Home Improvement Company installs
ID: 2561449 • Letter: X
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X Your answer is incorrect. Try again Grouper Home Improvement Company installs replacement siding, windows, and louvered glass doors for single-family homes and condominium complexes. The company is in the process of preparing its annual financial statements for the fiscal year ended May 31, 2017. Jim Alcide, controller for Grouper, has gathered the following data concerning inventory At May 31, 2017, the balance in Grouper's Raw Materials Inventory account was $493,680, and Allowance to Reduce Inventory to Market had a credit balance of $28,380 Alcide summarized the relevant inventory cost and market data at May 31, 2017, in the schedule below Alcide assigned Patricia Devereaux, an intern from a local college, the task of calculating the amount that should appear on Grouper's May 31, 2017, financial statements for inventory at lower-of-cost-or-market as applied to each item in inventory. Devereaux expressed concern over departing from the historical cost principle. Assume Garcia uses LIFO inventory costing Net Realizable Value $67,760 102,608 203,643 169,400 $543,411 Replacement Aluminum siding Cedar shake siding Louvered glass doors Thermal windows Cost $84,700 104,060 135,520 169,400 Cost $75,625 96,074 150,040 152,460 Sales Price $77,440 113,740 225,544 187,308 $604,032 Normal Profit $6,171 8,954 22,385 18,634 $56,144 Total $493,680 $474,199 (a1) Determine the proper balance in Allowance to Reduce Inventory to Market at May 31, 2017 Balance in the Allowance to Reduce Inventory to Market 18392 (a2) For the fiscal year ended May 31, 2017, determine the amount of the gain or loss that would be recorded due to the change in Allowance to Reduce Inventory to Market. The amount of the gain (loss) 9988Explanation / Answer
(a1) Balance in the Allowance to Reduce Inventory to Market: $41866
Cost $493680 - LCM $451814 = $41866
(a2) The amount of the gain (loss): ($13486)
The Allowance to Reduce Inventory to Market has a credit balance of $28380.
For the balance in the Allowance to Reduce Inventory to Market to be $41866, an additional credit of $13486 ($41866 - $28380) will be required by debiting the loss by the same amount.
Cost Replacement Cost Sales Price Net Realizable Value (Ceiling) Normal Profit NRV - Normal Profit (Floor) Market Value LCM Aluminium siding 84700 75625 77440 67760 6171 61589 67760 67760 Cedar shake siding 104060 96074 113740 102608 8954 93654 96074 96074 Louvered glass doors 135520 150040 225544 203643 22385 181258 181258 135520 Thermal windows 169400 152460 187308 169400 18634 150766 152460 152460 493680 474199 604032 543411 56144 451814Related Questions
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