Question

14:24 Hide Timer Sarasota Home Improvement Company installs replacement siding windows and lovered 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 Sarasota has gathered the following data concerning inventory At May 31, 2020, the balance in Sarasota's Raw Materials Inventory account was $477 360, and Allowance to Reduce Inventory to NRV had a credit balance of $27670 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 Sarasota'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. Aluminum siding Cedar shake siding Louvered glass doors Thermal windows Total Cost $81.900 100,620 131,040 163,800 $477 360 Sales Price Net Realizable Value $74,880 $65.520 109.980 99216 218,068 196911 181.116 163.800 $584,064 $525.447 Determine the proper balance in Allowance to Reduce Inventory to NRV at May 31, 2020 Balance in the Allowance to Reduce Inventory to NRV S 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 numberes.-45 or parentheseses (450 The amount of the gain (loss) $

Answer 1

Particulars	Cost	NRV	LCNRV
Aluminium siding	$81,900	$65,520	$65,520
Cedar shake siding	$100,620	$99,216	$99,216
Louvered glass doors	$131,040	$196,911	$131,040
Thermal windows	$163,800	$163,800	$163,800
Total	$477,360	$525,447	$459,576

Balance in the allowance to Reduce inventor to NRV= Cost - LCNRV

=$477360-459576= $17784

Part-a-2

Loss/(Gain) to be regognized = New Allowance- Credit balance of Allowance

=$17784-27670=-$9886