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 $
Chapter4: Job Order Costing
Section: Chapter Questions
Problem 4EB: Masonrys records show the raw materials inventory had purchases of $1,000and an ending raw materials...
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Subject:- General Account
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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