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Sheridan 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 3: 2025. Jim Alcide, controller for Sheridan, has gathered the following data concerning inventory. At May 31, 2025, the balance in Sheridan's Raw Materials Inventory account was $493,680. Alcide summarized the relevant invento 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 Sheridan 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 Sheridan uses LIFO inventory costing. Cost Replacement Cost Sales Price Net Realizable Value Normal Profit Aluminum siding $84,700 $75,625 $77,440 $67,760 $6,171 Cedar shake siding 104,060 96,074 113,740 102,608 8,954 Louvered glass doors 135,520 150,040 225,544 203,643 22,385 Thermal windows 169,400 152,460 187,308 169,400 18,634 Total $493,680 $474,199 $604,032 $543,411 $56,144 (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

Sheridan 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 3: 2025. Jim Alcide, controller for Sheridan, has gathered the following data concerning inventory. At May 31, 2025, the balance in Sheridan's Raw Materials Inventory account was $493,680. Alcide summarized the relevant invento 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 Sheridan 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 Sheridan uses LIFO inventory costing. Cost Replacement Cost Sales Price Net Realizable Value Normal Profit Aluminum siding $84,700 $75,625 $77,440 $67,760 $6,171 Cedar shake siding 104,060 96,074 113,740 102,608 8,954 Louvered glass doors 135,520 150,040 225,544 203,643 22,385 Thermal windows 169,400 152,460 187,308 169,400 18,634 Total $493,680 $474,199 $604,032 $543,411 $56,144 (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

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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Sheridan 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 Sheridan, has gathered the following data concerning inventory. At May 31, 2025, the balance in Sheridan's Raw Materials Inventory account was $493,680. 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 Sheridan'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 Sheridan uses LIFO inventory costing. Cost Replacement Cost Sales Price Net Realizable Value Normal Profit Aluminum siding $84,700 $75,625 $77,440 $67,760 $6,171 Cedar shake siding 104,060 96,074 113,740 102,608 8,954 Louvered glass doors 135,520 150,040 225,544 203,643 22,385 Thermal windows 169,400 152,460 187,308 169,400 18,634 Total $493,680 $474,199 $604,032 $543,411 $56,144 (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:Sheridan 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 Sheridan, has gathered the following data concerning inventory. At May 31, 2025, the balance in Sheridan's Raw Materials Inventory account was $493,680. 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 Sheridan'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 Sheridan uses LIFO inventory costing. Cost Replacement Cost Sales Price Net Realizable Value Normal Profit Aluminum siding $84,700 $75,625 $77,440 $67,760 $6,171 Cedar shake siding 104,060 96,074 113,740 102,608 8,954 Louvered glass doors 135,520 150,040 225,544 203,643 22,385 Thermal windows 169,400 152,460 187,308 169,400 18,634 Total $493,680 $474,199 $604,032 $543,411 $56,144 (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
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