Sandhill 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 Sandhill, has gathered the following data concerning inventory. At May 31, 2025, the balance in Sandhill's Raw Materials Inventory account was $440,640. 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 Sandhill'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 Sandhill uses LIFO inventory costing. Aluminum siding Cedar shake siding Louvered glass doors Thermal windows Total Inventory loss Cost $ $75,600 92,880 120,960 151,200 $440,640 Replacement Cost $67,500 85,752 133,920 136,080 $423,252 Sales Price $69,120 101,520 201,312 167,184 $539,136 Net Realizable Value (a1) Determine the write-down, if any, to reduce inventory to market at May 31, 2025. $60,480 91,584 181,764 151,200 $485,028 Normal Profit $5,508 7,992 19,980 16,632 $50,112
Sandhill 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 Sandhill, has gathered the following data concerning inventory. At May 31, 2025, the balance in Sandhill's Raw Materials Inventory account was $440,640. 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 Sandhill'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 Sandhill uses LIFO inventory costing. Aluminum siding Cedar shake siding Louvered glass doors Thermal windows Total Inventory loss Cost $ $75,600 92,880 120,960 151,200 $440,640 Replacement Cost $67,500 85,752 133,920 136,080 $423,252 Sales Price $69,120 101,520 201,312 167,184 $539,136 Net Realizable Value (a1) Determine the write-down, if any, to reduce inventory to market at May 31, 2025. $60,480 91,584 181,764 151,200 $485,028 Normal Profit $5,508 7,992 19,980 16,632 $50,112
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 Account Titles and Explanation
May 31
Debit
Credit
Transcribed Image Text:Sandhill 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 Sandhill, has gathered the following data concerning inventory.
At May 31, 2025, the balance in Sandhill's Raw Materials Inventory account was $440,640. 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 Sandhill'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 Sandhill uses LIFO inventory costing.
Aluminum siding
Cedar shake siding
Louvered glass doors
Thermal windows
Total
Inventory loss
Cost
$75,600
92,880
$
120,960
151.200
$440,640
Replacement
Cost
$67,500
85,752
133,920
136,080
$423,252
Sales Price
$69,120
101,520
201,312
167,184
$539,136
Net Realizable
Value
$60,480
91,584
181,764
(a1) Determine the write-down, if any, to reduce inventory to market at May 31, 2025.
151,200
$485,028
Normal Profit
$5,508
7.992
19,980
16,632
$50,112
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