Coronado 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, 2020. Jim Alcide, controller for Coronado, has gathered the following data concerning inventory. At May 31. 2020, the balance in Coronado's Raw Materials Inventory account was $501,840, and Allowance to Reduce Inventory to Market had a credit balance of $29,360. Alcide summarized the relevant inventory cost and market data at May 31, 2020, in the schedule below. Alcide assigned Patricia Devereaux, an intern from a local college, the task of calculating the amount that should appear on Coronado's May 31, 2020, 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. Replacement Net Realizable Cost Cost Sales Price Value Normal Profit Aluminum siding $86,100 $76,875 $78,720 $68.880 $6,273 Cedar shake siding 105,780 97,662 115,620 104,304 9,102 Louvered glass doors 137,760 152.520 229,272 207.009 22,755 Thermal windows 172,200 154,980 190,404 172,200 18,942 Total $501,840 $482,037 $614,016 $552,393 $57,072 (a1) Determine the proper balance in Allowance to Reduce Inventory to Market at May 31, 2020. Balance in the Allowance to Reduce Inventory to Market 42638 (a2) For the fiscal year ended May 31, 2020, 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) %24 13278
Coronado 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, 2020. Jim Alcide, controller for Coronado, has gathered the following data concerning inventory. At May 31. 2020, the balance in Coronado's Raw Materials Inventory account was $501,840, and Allowance to Reduce Inventory to Market had a credit balance of $29,360. Alcide summarized the relevant inventory cost and market data at May 31, 2020, in the schedule below. Alcide assigned Patricia Devereaux, an intern from a local college, the task of calculating the amount that should appear on Coronado's May 31, 2020, 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. Replacement Net Realizable Cost Cost Sales Price Value Normal Profit Aluminum siding $86,100 $76,875 $78,720 $68.880 $6,273 Cedar shake siding 105,780 97,662 115,620 104,304 9,102 Louvered glass doors 137,760 152.520 229,272 207.009 22,755 Thermal windows 172,200 154,980 190,404 172,200 18,942 Total $501,840 $482,037 $614,016 $552,393 $57,072 (a1) Determine the proper balance in Allowance to Reduce Inventory to Market at May 31, 2020. Balance in the Allowance to Reduce Inventory to Market 42638 (a2) For the fiscal year ended May 31, 2020, 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) %24 13278
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Coronado 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.
2020. Jim Alcide, controller for Coronado, has gathered the following data concerning inventory.
At May 31. 2020, the balance in Coronado's Raw Materials Inventory account was $501,840, and Aliowance to Reduce Inventory to
Market had a credit balance of $29,360. Alcide summarized the relevant inventory cost and market data at May 31, 2020, in the
schedule below.
Alcide assigned Patricia Devereaux, an intern from a local college, the task of calculating the amount that should appear on Coronado's
May 31, 2020, 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.
Replacement
Net Realizable
Cost
Cost
Sales Price
Value
Normal Profit
Aluminum siding
$86,100
$76,875
$78,720
$68.880
$6,273
Cedar shake siding
105,780
97,662
115,620
104,304
9,102
Louvered glass doors
137.760
152.520
229,272
207.009
22,755
Thermal windows
172,200
154,980
190,404
172,200
18,942
Total
$501,840
$482,037
$614,016
$552,393
$57,072
(a1) Determine the proper balance in Allowance to Reduce Inventory to Market at May 31, 202o.
Balance in the Allowance to Reduce Inventory to Market
42638
(a2) For the fiscal year ended May 31, 2020, 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)
13278
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