P9-2 (Lower-of-Cost-or-Market) Garcia Home Improvement Companyinstalls replacement siding, windows, and louvered glass doors forsingle-family homes and condominium complexes in northern NewJersey and southern New York. The company is in the process ofpreparing its annual financial statements for the fiscal year endedMay 31, 2014, and Jim Alcide, controller for Garcia, has gatheredthe following data concerning inventory. At May 31, 2014, thebalance in Garciaâs Raw Material Inventory account was $408,000 andthe Allowance to Reduce Inventory to Market had a credit balance of$27,500 Alcide summarized the relevant inventory cost and marketdata at May 31, 2014, in the schedule below. Alcide assignedPatricia Devereaux, an intern from a local college, the task ofcalculating the amount that should appear on Garciaâs May 31, 2014,financial statements for inventory under thelower-of-cost-or-market rule as applied to each item in inventory.Devereaux expressed concern over departing from the cost principle.Cost "Replacement Cost" Sales Price "Net Realizable Value" NormalProfit Aluminum siding $70,000 $62,500 $64,000 $56,000 $5,100 Cedarshake siding 86,000 79,400 94,000 84,800 7,400 Louvered glass doors112,000 124,000 186,400 168,300 18,500 Thermal windows 140,000126,000 154,800 140,000 15,400 Total $408,000 $391,900 $499,200$449,100 $46,400 Instructions: (a) (1) Determine the proper balancein the Allowance to Reduce Inventory to Market at May 31, 2014.Calculations of Proper Balance on the Allowance to Reduce Inventoryto Market At May 31, 2014.
P9-2 (Lower-of-Cost-or-Market) Garcia Home Improvement Companyinstalls replacement siding, windows, and louvered glass doors forsingle-family homes and condominium complexes in northern NewJersey and southern New York. The company is in the process ofpreparing its annual financial statements for the fiscal year endedMay 31, 2014, and Jim Alcide, controller for Garcia, has gatheredthe following data concerning inventory. At May 31, 2014, thebalance in Garciaâs Raw Material Inventory account was $408,000 andthe Allowance to Reduce Inventory to Market had a credit balance of$27,500 Alcide summarized the relevant inventory cost and marketdata at May 31, 2014, in the schedule below. Alcide assignedPatricia Devereaux, an intern from a local college, the task ofcalculating the amount that should appear on Garciaâs May 31, 2014,financial statements for inventory under thelower-of-cost-or-market rule as applied to each item in inventory.Devereaux expressed concern over departing from the cost principle.Cost "Replacement Cost" Sales Price "Net Realizable Value" NormalProfit Aluminum siding $70,000 $62,500 $64,000 $56,000 $5,100 Cedarshake siding 86,000 79,400 94,000 84,800 7,400 Louvered glass doors112,000 124,000 186,400 168,300 18,500 Thermal windows 140,000126,000 154,800 140,000 15,400 Total $408,000 $391,900 $499,200$449,100 $46,400 Instructions: (a) (1) Determine the proper balancein the Allowance to Reduce Inventory to Market at May 31, 2014.Calculations of Proper Balance on the Allowance to Reduce Inventoryto Market At May 31, 2014.
Related questions
1-Nash 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 Nash, has gathered the following data concerning inventory. At May 31, 2017, the balance in Nashâs Raw Materials Inventory account was $456,960, and Allowance to Reduce Inventory to NRV had a credit balance of $27,660. 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 Nashâs May 31, 2017, financial statements for inventory under the LCNRV rule as applied to each item in inventory. Devereaux expressed concern over departing from the historical cost principle. Cost Sales Price Net Realizable Value Aluminum siding $78,400 $71,680 $62,720 Cedar shake siding 96,320 105,280 94,976 Louvered glass doors 125,440 208,768 188,496 Thermal windows 156,800 173,376 156,800 Total $456,960 $559,104 $502,992 -Determine the proper balance in Allowance to Reduce Inventory to NRV at May 31, 2017. Balance in the Allowance to Reduce Inventory to NRV $ and The amount of the gain (loss)$
2-The records for the Clothing Department of Novakâs Discount Store are summarized below for the month of January.
| inventory, January 1: at retail $24,600; at cost $17,000 | ||||||
| Purchases in January: at retail $138,400; at cost $94,259 | ||||||
| Freight-in: $9,100 | ||||||
| Purchase returns: at retail $3,000; at cost $2,300 | ||||||
| Transfers in from suburban branch: at retail $13,100; at cost $6,900 | ||||||
| Net markups: $8,000 | ||||||
| Net markdowns: $3,900 | ||||||
| Inventory losses due to normal breakage, etc.: at retail $300 | ||||||
| Sales revenue at retail: $95,400 | ||||||
| Sales returns: $2,400 Compute the inventory for this department as of January 31, at retail prices.
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