digo Home Improvement Company installs replacement siding, windows, and louvered glass doors for single-family homes and ndominium complexes. The company is in the process of preparing its annual financial statements for the fiscal year ended May 31, 25. Jim Alcide, controller for Indigo, has gathered the following data concerning inventory. May 31, 2025, the balance in Indigo's Raw Materials Inventory account was $452,880. Alcide summarized the relevant inventory st and market data at May 31, 2025, in the schedule below. cide assigned Patricia Devereaux, an intern from a local college, the task of calculating the amount that should appear on Indigo's ay 31, 2025, financial statements for inventory under the lower-of-cost-or-market rule as applied to each item in inventory. evereaux expressed concern over departing from the historical cost principle. Consider the following expanded data at May 31. 025. Assume Indigo uses LIFO inventory costing. Aluminum siding Cedar shake siding ouvered glass doors Thermal windows Total Cost $77,700 95,460 124,320 155,400 $452,880 Replacement Cost $69,375 88,134 137,640 139,860 $435,009 Sales Price $71,040 104,340 206,904 171,828 $554,112 Net Realizable Value $62,160 94,128 186,813 155,400 $498,501 Normal Profit $5,661 8,214 20,535 17,094 $51.504
digo Home Improvement Company installs replacement siding, windows, and louvered glass doors for single-family homes and ndominium complexes. The company is in the process of preparing its annual financial statements for the fiscal year ended May 31, 25. Jim Alcide, controller for Indigo, has gathered the following data concerning inventory. May 31, 2025, the balance in Indigo's Raw Materials Inventory account was $452,880. Alcide summarized the relevant inventory st and market data at May 31, 2025, in the schedule below. cide assigned Patricia Devereaux, an intern from a local college, the task of calculating the amount that should appear on Indigo's ay 31, 2025, financial statements for inventory under the lower-of-cost-or-market rule as applied to each item in inventory. evereaux expressed concern over departing from the historical cost principle. Consider the following expanded data at May 31. 025. Assume Indigo uses LIFO inventory costing. Aluminum siding Cedar shake siding ouvered glass doors Thermal windows Total Cost $77,700 95,460 124,320 155,400 $452,880 Replacement Cost $69,375 88,134 137,640 139,860 $435,009 Sales Price $71,040 104,340 206,904 171,828 $554,112 Net Realizable Value $62,160 94,128 186,813 155,400 $498,501 Normal Profit $5,661 8,214 20,535 17,094 $51.504
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Indigo 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 Indigo, has gathered the following data concerning inventory.
At May 31, 2025, the balance in Indigo's Raw Materials Inventory account was $452,880. 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 Indigo'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 Indigo uses LIFO inventory costing.
Aluminum siding
Cedar shake siding
Louvered glass doors
Thermal windows
Total
Cost
$77,700
95,460
124,320
Replacement
Cost
$69,375
88,134
137,640
155,400
139,860
$452,880 $435,009
Sales Price
$71,040
104,340
206,904
171,828
$554,112
Net Realizable
Value
$62,160
94,128
186,813
155,400
$498,501
Normal Profit
$5,661
8,214
20,535
17,094
$51,504
Transcribed Image Text:(a1) Determine the write-down, if any, to reduce inventory to market at May 31, 2025.
Inventory loss $
(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
May 31
31191
Account Titles and Explanation
Inventory Loss
Inventory
Debit
31191
Credit
31191
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