Buffalo 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, 2025. Jim Alcide, controller for Buffalo, has gathered the following data concerning inventory. At May 31, 2025, the balance in Buffalo's Raw Materials Inventory account was $436,560. Alcide summarized the relevant inventory cost and market data at May 31, 2025, in the schedule below. Alcide assigned Patricia Devereaux, an intern from a local college, the task of calculating the amount that should appear on Buffalo's May 31, 2025, financial statements for inventory under the lower-of-cost-or- market rule as applied to each item in inventory. Devereaux expressed concern over departing from the historical cost principle. Consider the following expanded data at May 31, 2025. Assume Buffalo uses LIFO inventory costing. Aluminum siding Cedar shake siding Louvered glass doors Thermal windows Total Inventory loss Cost $ $74,900 92,020 119,840 149,800 $436,560 Replacement Cost $66,875 84,958 132,680 134,820 $419,333 Sales Price $68,480 100,580 199,448 165,636 $534,144 Net Realizable Value $59,920 90,736 180,081 149,800 (a1) Determine the write-down, if any, to reduce inventory to market at May 31, 2025. $480,537 Normal Profit $5,457 7,918 19,795 16,478 $49,648
Buffalo 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, 2025. Jim Alcide, controller for Buffalo, has gathered the following data concerning inventory. At May 31, 2025, the balance in Buffalo's Raw Materials Inventory account was $436,560. Alcide summarized the relevant inventory cost and market data at May 31, 2025, in the schedule below. Alcide assigned Patricia Devereaux, an intern from a local college, the task of calculating the amount that should appear on Buffalo's May 31, 2025, financial statements for inventory under the lower-of-cost-or- market rule as applied to each item in inventory. Devereaux expressed concern over departing from the historical cost principle. Consider the following expanded data at May 31, 2025. Assume Buffalo uses LIFO inventory costing. Aluminum siding Cedar shake siding Louvered glass doors Thermal windows Total Inventory loss Cost $ $74,900 92,020 119,840 149,800 $436,560 Replacement Cost $66,875 84,958 132,680 134,820 $419,333 Sales Price $68,480 100,580 199,448 165,636 $534,144 Net Realizable Value $59,920 90,736 180,081 149,800 (a1) Determine the write-down, if any, to reduce inventory to market at May 31, 2025. $480,537 Normal Profit $5,457 7,918 19,795 16,478 $49,648
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Buffalo 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,
2025. Jim Alcide, controller for Buffalo, has gathered the following data concerning inventory.
At May 31, 2025, the balance in Buffalo's Raw Materials Inventory account was $436,560. Alcide summarized the relevant inventory
cost and market data at May 31, 2025, in the schedule below.
Alcide assigned Patricia Devereaux, an intern from a local college, the task of calculating the amount that should appear on Buffalo's
May 31, 2025, financial statements for inventory under the lower-of-cost-or-market rule as applied to each item in inventory.
Devereaux expressed concern over departing from the historical cost principle. Consider the following expanded data at May 31,
2025. Assume Buffalo uses LIFO inventory costing.
Aluminum siding
Cedar shake siding
Louvered glass doors
Thermal windows
Total
Inventory loss
Cost
$
$74,900
92,020
119,840
149,800
$436,560
Replacement
Cost
$66,875
84,958
132,680
134,820
$419,333
Sales Price
$68,480
100,580
199,448
165,636
$534,144
Net
Realizable
Value
$59,920
90,736
180,081
149,800
(a1) Determine the write-down, if any, to reduce inventory to market at May 31, 2025.
$480,537
Normal
Profit
$5,457
7,918
19,795
16,478
$49,648
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