Question

Problem 9-2

Whispering 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 Whispering, has gathered the following data concerning inventory.

At May 31, 2017, the balance in Whispering’s Raw Materials Inventory account was $448,800, and Allowance to Reduce Inventory to NRV had a credit balance of $27,710. 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 Whispering’s 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	$77,000	$70,400	$61,600
Cedar shake siding	94,600	103,400	93,280
Louvered glass doors	123,200	205,040	185,130
Thermal windows	154,000	170,280	154,000
Total	$448,800	$549,120	$494,010

Determine the proper balance in Allowance to Reduce Inventory to NRV at May 31, 2017.

Balance in the Allowance to Reduce Inventory to NRV $_____________

Answer 1