Sandhill Home Improvement Company installs replacement siding, windows, and louvered glass doors for single-family homes andcondominium 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 Sandhill, has gathered the following data concerning inventory.At May 31, 2020, the balance in Sandhill's Raw Materials Inventory account was $510,000, and Allowance to Reduce Inventory toMarket had a credit balance of $29,580. Alcide summarized the relevant inventory cost and market data at May 31, 2020, in theschedule below.Alcide assigned Patricia Devereaux, an intern from a local college, the task of calculating the amount that should appear on Sandhill'sMay 31, 2020, financial statements for inventory at lower-of-cost-or-market as applied to each item in inventory. Devereauxexpressed concern over departing from the historical cost principle. Assume Garcia uses LIFO inventory costing.ReplacementNet RealizableCostCostSales PriceValueNormal ProfitAluminum siding$87,500$78,125$80,000$70,000$6,375Cedar shake siding107,50099,250117,500106,0009,250Louvered glass doors140,000155,000233,000210,37523,125Thermal windows175,000157,500193,500175,00019,250Total$510,000$489,875$624,000$561,375$58,000(a1) Determine the proper balance in Allowance to Reduce Inventory to Market at May 31, 2020.Balance in the Allowance to Reduce Inventory to Market$(a2) For the fiscal year ended May 31, 2020, determine the amount of the gain or loss that would be recorded due to the change inAllowance to Reduce Inventory to Market.The amount of the gain (loss)$

(a1) Determine the proper balance in Allowance to Reduce Inventory to Market at May 31, 2020. Balance in the Allowance to Reduce Inventory to Market $ (a2) For the fiscal year ended May 31, 2020, determine the amount of the gain or loss that would be recorded due to the change in Allowance to Reduce Inventory to Market. The amount of the gain (loss) %24 %24

(a1) Determine the proper balance in Allowance to Reduce Inventory to Market at May 31, 2020. Balance in the Allowance to Reduce Inventory to Market $ (a2) For the fiscal year ended May 31, 2020, determine the amount of the gain or loss that would be recorded due to the change in Allowance to Reduce Inventory to Market. The amount of the gain (loss) %24 %24

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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