Question

TROYARD HOME IMPROVEMENTS installs replacement siding, windows, and louvered glass doors for single family homes and condominium complexes in Quezon City. The company is in the process of preparing its annual financial following data concerning inventory. At May 31, 2014, the balance in TROYARD's Raw Material Inventory account was P1,224,000, and the Allowance to Reduce Inventory to NRV had a credit balance of P82,500. Lansang summarized the relevant inventory cost and idrkei údid ai ividy 3i,2o14, in uve suíneduie beiow. Sales

Answer 1

1

Answer is 45,600

Particulars	Cost	NRV	Allowance
Aluminum siding	210,000	168,000	42,000
Cedar shake siding	258,000	254,400	3,600
Glass doors	336,000	504,900	-
Thermal doors	420,000	420,000	-
Total	1,224,000	1,347,300	45,600

2

Allowance required is only 45,600 but balance is 82,500. Gain on reduction of allowance = 82,900 - 45,600 = 36,900

Answer is D. 36,900 gain