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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, 2017. Jim Alcide, the controller for Indigo, has gathered the following data concerning inventory. At May 31, 2017, the balance in Indigo's Raw Materials Inventory account was $461,040, and Allowance to Reduce Inventory to NRV had a credit balance of $27,280. Alcide summarized the relevant inventory cost and market data on 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 Indigo'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 $ 79,100 $ 72,320 $ 63,280 Cedar shake siding 97,180 1,06,220 95,824 Louvered glass 1,26,560 2,10,632 1,90,179 Thermal windows 1,58,200 1,74,924 1,58,200 Total $4,61,040 $5,64,096 $ 5,07,483 a. Determine the proper balance in Allowance to Reduce Inventory to NRV on May 31, 2017. Balance in the Allowance to Reduce Inventory to NRV $

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, 2017. Jim Alcide, the controller for Indigo, has gathered the following data concerning inventory. At May 31, 2017, the balance in Indigo's Raw Materials Inventory account was $461,040, and Allowance to Reduce Inventory to NRV had a credit balance of $27,280. Alcide summarized the relevant inventory cost and market data on 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 Indigo'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 $ 79,100 $ 72,320 $ 63,280 Cedar shake siding 97,180 1,06,220 95,824 Louvered glass 1,26,560 2,10,632 1,90,179 Thermal windows 1,58,200 1,74,924 1,58,200 Total $4,61,040 $5,64,096 $ 5,07,483 a. Determine the proper balance in Allowance to Reduce Inventory to NRV on May 31, 2017. Balance in the Allowance to Reduce Inventory to NRV $

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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Subject:- General Account

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, 2017. Jim Alcide, the controller for Indigo, has gathered the following data concerning inventory. At May 31, 2017, the balance in Indigo's Raw Materials Inventory account was $461,040, and Allowance to Reduce Inventory to NRV had a credit balance of $27,280. Alcide summarized the relevant inventory cost and market data on 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 Indigo'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 $ 79,100 $ 72,320 $ 63,280 Cedar shake siding 97,180 1,06,220 95,824 Louvered glass 1,26,560 2,10,632 1,90,179 Thermal windows 1,58,200 1,74,924 1,58,200 Total $4,61,040 $5,64,096 $ 5,07,483 a. Determine the proper balance in Allowance to Reduce Inventory to NRV on May 31, 2017. Balance in the Allowance to Reduce Inventory to NRV $
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, 2017. Jim Alcide, the controller for Indigo, has gathered the following data concerning inventory. At May 31, 2017, the balance in Indigo's Raw Materials Inventory account was $461,040, and Allowance to Reduce Inventory to NRV had a credit balance of $27,280. Alcide summarized the relevant inventory cost and market data on 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 Indigo'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 $ 79,100 $ 72,320 $ 63,280 Cedar shake siding 97,180 1,06,220 95,824 Louvered glass 1,26,560 2,10,632 1,90,179 Thermal windows 1,58,200 1,74,924 1,58,200 Total $4,61,040 $5,64,096 $ 5,07,483 a. Determine the proper balance in Allowance to Reduce Inventory to NRV on May 31, 2017. Balance in the Allowance to Reduce Inventory to NRV $
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