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Buffalo 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, 2025. Jim Alcide, controller for Buffalo, has gathered the following data concerning inventory At May 31, 2025, the balance in Buffalo's Raw Materials Inventory account was $416,160. Alcide summarized the relevant inventory cost and market data at May 31, 2025, in the schedule below. Alcide assigned Patricia Devereaux, an intern from a local college, the task of calculating the amount that should appear on Buffalo's May 31, 2025, financial statements for inventory under the lower-of-cost-or-market rule as applied to each item in inventory. Devereaux expressed concern over departing from the historical cost principle. Consider the following expanded data at May 31. 2025. Assume Buffalo uses LIFO inventory costing

Buffalo 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, 2025. Jim Alcide, controller for Buffalo, has gathered the following data concerning inventory At May 31, 2025, the balance in Buffalo's Raw Materials Inventory account was $416,160. Alcide summarized the relevant inventory cost and market data at May 31, 2025, in the schedule below. Alcide assigned Patricia Devereaux, an intern from a local college, the task of calculating the amount that should appear on Buffalo's May 31, 2025, financial statements for inventory under the lower-of-cost-or-market rule as applied to each item in inventory. Devereaux expressed concern over departing from the historical cost principle. Consider the following expanded data at May 31. 2025. Assume Buffalo uses LIFO inventory costing

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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(a2) For the fiscal year ended May 31, 2025, prepare the entry to record the decline in inventory to market, if any, using the loss method. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation May 31 Debit Credit
Transcribed Image Text:(a2) For the fiscal year ended May 31, 2025, prepare the entry to record the decline in inventory to market, if any, using the loss method. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation May 31 Debit Credit
Buffalo 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, 2025. Jim Alcide, controller for Buffalo, has gathered the following data concerning inventory. At May 31, 2025, the balance in Buffalo's Raw Materials Inventory account was $416,160. Alcide summarized the relevant inventory cost and market data at May 31, 2025, in the schedule below. Alcide assigned Patricia Devereaux, an intern from a local college, the task of calculating the amount that should appear on Buffalo's May 31, 2025, financial statements for inventory under the lower-of-cost-or-market rule as applied to each item in inventory. Devereaux expressed concern over departing from the historical cost principle. Consider the following expanded data at May 31. 2025. Assume Buffalo uses LIFO inventory costing. Aluminum siding Cedar shake siding Louvered glass doors Thermal windows Total Replacement Cost Cost $71,400 $63,750 87,720 80,988 114.240 126,480 142,800 128,520 $416,160 Inventory loss $399,738 Sales Price $65,280 95,880 190,128 157,896 $509,184 Net Realizable Value $57,120 86,496 171,666 142,800 $458,082 (a1) Determine the write-down, if any, to reduce inventory to market at May 31, 2025. Normal Profit $5,202 7,548 18,870 15,708 $47,328
Transcribed Image Text:Buffalo 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, 2025. Jim Alcide, controller for Buffalo, has gathered the following data concerning inventory. At May 31, 2025, the balance in Buffalo's Raw Materials Inventory account was $416,160. Alcide summarized the relevant inventory cost and market data at May 31, 2025, in the schedule below. Alcide assigned Patricia Devereaux, an intern from a local college, the task of calculating the amount that should appear on Buffalo's May 31, 2025, financial statements for inventory under the lower-of-cost-or-market rule as applied to each item in inventory. Devereaux expressed concern over departing from the historical cost principle. Consider the following expanded data at May 31. 2025. Assume Buffalo uses LIFO inventory costing. Aluminum siding Cedar shake siding Louvered glass doors Thermal windows Total Replacement Cost Cost $71,400 $63,750 87,720 80,988 114.240 126,480 142,800 128,520 $416,160 Inventory loss $399,738 Sales Price $65,280 95,880 190,128 157,896 $509,184 Net Realizable Value $57,120 86,496 171,666 142,800 $458,082 (a1) Determine the write-down, if any, to reduce inventory to market at May 31, 2025. Normal Profit $5,202 7,548 18,870 15,708 $47,328
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