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Crane 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 Crane, has gathered the following data concerning inventory. At May 31, 2017, the balance in Crane's Raw Materials Inventory account was $481,440, and Allowance to Reduce Inventory to NRV had a credit balance of $27,240. 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 Crane's 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 $ 82,600 $ 75,520 $ 66,080 Cedar shake siding 1,01,480 1,10,920 1,00,064 Louvered glass 1,32,160 2,19,952 1,98,594 doors Thermal windows 1,65,200 1,82,664 1,65,200 Total $4,81,440 $5,89,056 $ 5,29,938 Determine the proper balance in Allowance to Reduce Inventory to NRV at May 31, 2017.

Crane 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 Crane, has gathered the following data concerning inventory. At May 31, 2017, the balance in Crane's Raw Materials Inventory account was $481,440, and Allowance to Reduce Inventory to NRV had a credit balance of $27,240. 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 Crane's 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 $ 82,600 $ 75,520 $ 66,080 Cedar shake siding 1,01,480 1,10,920 1,00,064 Louvered glass 1,32,160 2,19,952 1,98,594 doors Thermal windows 1,65,200 1,82,664 1,65,200 Total $4,81,440 $5,89,056 $ 5,29,938 Determine the proper balance in Allowance to Reduce Inventory to NRV at May 31, 2017.

Financial Accounting
Financial Accounting
14th Edition
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Carl Warren, Jim Reeve, Jonathan Duchac
Chapter7: Inventories
Section: Chapter Questions
Problem 5PA
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Crane 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 Crane, has gathered the following data concerning inventory. At May 31, 2017, the balance in Crane's Raw Materials Inventory account was $481,440, and Allowance to Reduce Inventory to NRV had a credit balance of $27,240. 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 Crane's 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 $ 82,600 $ 75,520 $ 66,080 Cedar shake siding 1,01,480 1,10,920 1,00,064 Louvered glass 1,32,160 2,19,952 1,98,594 doors Thermal windows 1,65,200 1,82,664 1,65,200 Total $4,81,440 $5,89,056 $ 5,29,938 Determine the proper balance in Allowance to Reduce Inventory to NRV at May 31, 2017.
Transcribed Image Text:Crane 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 Crane, has gathered the following data concerning inventory. At May 31, 2017, the balance in Crane's Raw Materials Inventory account was $481,440, and Allowance to Reduce Inventory to NRV had a credit balance of $27,240. 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 Crane's 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 $ 82,600 $ 75,520 $ 66,080 Cedar shake siding 1,01,480 1,10,920 1,00,064 Louvered glass 1,32,160 2,19,952 1,98,594 doors Thermal windows 1,65,200 1,82,664 1,65,200 Total $4,81,440 $5,89,056 $ 5,29,938 Determine the proper balance in Allowance to Reduce Inventory to NRV at May 31, 2017.
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