Problem 9-2 CHAPTER 9 Intermediate ACCT 1
Vaughn Home Improvement Company installs replacement siding,windows, and louvered glass doors for single-family homes andcondominium complexes. The company is in the process of preparingits annual financial statements for the fiscal year ended May 31,2017. Jim Alcide, controller for Vaughn, has gathered the followingdata concerning inventory.
At May 31, 2017, the balance in Vaughnâs Raw Materials Inventoryaccount was $436,560, and Allowance to Reduce Inventory to NRV hada credit balance of $27,400. Alcide summarized the relevantinventory cost and market data at May 31, 2017, in the schedulebelow.
Alcide assigned Patricia Devereaux, an intern from a local college,the task of calculating the amount that should appear on VaughnâsMay 31, 2017, financial statements for inventory under the LCNRVrule as applied to each item in inventory. Devereaux expressedconcern over departing from the historical cost principle.
Cost
Sales Price
Net Realizable Value
Aluminum siding
$74,900
$68,480
$59,920
Cedar shake siding
92,020
100,580
90,736
Louvered glass doors
119,840
199,448
180,081
Thermal windows
149,800
165,636
149,800
Total
$436,560
$534,144
$480,537
Determine the proper balance in Allowance to Reduce Inventory toNRV at May 31, 2017.
Balance in the Allowance to Reduce Inventory to NRV
$
For the fiscal year ended May 31, 2017, determine the amount ofthe gain or loss that would be recorded (using the loss method) dueto the change in Allowance to Reduce Inventory to NRV.(Enter loss using either a negative sign preceding thenumber e.g. -45 or parentheses e.g. (45).)
The amount of the gain (loss)
$
| |||||||||||||||||||||||||||||||||||||||||||||||||||||
| ||||||||||
|
Related questions
1-Nash 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, 2017. Jim Alcide, controller for Nash, has gathered the following data concerning inventory. At May 31, 2017, the balance in Nashâs Raw Materials Inventory account was $456,960, and Allowance to Reduce Inventory to NRV had a credit balance of $27,660. Alcide summarized the relevant inventory cost and market data at May 31, 2017, in the schedule below. Alcide assigned Patricia Devereaux, an intern from a local college, the task of calculating the amount that should appear on Nashâs May 31, 2017, 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 $78,400 $71,680 $62,720 Cedar shake siding 96,320 105,280 94,976 Louvered glass doors 125,440 208,768 188,496 Thermal windows 156,800 173,376 156,800 Total $456,960 $559,104 $502,992 -Determine the proper balance in Allowance to Reduce Inventory to NRV at May 31, 2017. Balance in the Allowance to Reduce Inventory to NRV $ and The amount of the gain (loss)$
2-The records for the Clothing Department of Novakâs Discount Store are summarized below for the month of January.
| inventory, January 1: at retail $24,600; at cost $17,000 | ||||||
| Purchases in January: at retail $138,400; at cost $94,259 | ||||||
| Freight-in: $9,100 | ||||||
| Purchase returns: at retail $3,000; at cost $2,300 | ||||||
| Transfers in from suburban branch: at retail $13,100; at cost $6,900 | ||||||
| Net markups: $8,000 | ||||||
| Net markdowns: $3,900 | ||||||
| Inventory losses due to normal breakage, etc.: at retail $300 | ||||||
| Sales revenue at retail: $95,400 | ||||||
| Sales returns: $2,400 Compute the inventory for this department as of January 31, at retail prices.
|
