Question

Tamarisk Home Improvement Company installs replacement siding, windows, and louvered glass doors for single-family homes and...

Tamarisk 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, 2020. Jim Alcide, controller for Tamarisk, has gathered the following data concerning inventory.

At May 31, 2020, the balance in Tamarisk’s Raw Materials Inventory account was $424,320, and Allowance to Reduce Inventory to NRV had a credit balance of $27,440. Alcide summarized the relevant inventory cost and market data at May 31, 2020, in the schedule below.

Alcide assigned Patricia Devereaux, an intern from a local college, the task of calculating the amount that should appear on Tamarisk’s May 31, 2020, 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 $72,800 $66,560 $58,240
Cedar shake siding 89,440 97,760 88,192
Louvered glass doors 116,480 193,856 175,032
Thermal windows 145,600 160,992 145,600
      Total $424,320 $519,168 $467,064

Determine the proper balance in Allowance to Reduce Inventory to NRV at May 31, 2020.

Balance in the Allowance to Reduce Inventory to NRV

$

For the fiscal year ended May 31, 2020, determine the amount of the gain or loss that would be recorded (using the loss method) due to the change in Allowance to Reduce Inventory to NRV. (Enter loss using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

The amount of the gain (loss)

$

Homework Answers

Answer #1

1)

Particulars

Cost

Net Realizable value

LCM

Aluminium siding

72,800

58,240

58,240

Cedar shake siding

89,440

88,192

88,192

Louvered glass doors

116,480

175,032

116,480

Thermal windows

145,600

145,600

145,600

Total

424,320

467,064

408,512

2)

Inventory cost

$424,320

Less: LCM

$408,512

Allowance on may

$15,808

Particulars

Amount

Balance exist before adjustment

$27,440

Less: required balance

$15,808

Gain to be recorded

$11,632

  I hope it is useful to u if u have any doubt pls comment give me up thumb

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