Garcia Home Improvement Company installs replacement siding, windows, and louvered glass doors for single-family homes and condominium complexes in northern New Jersey and southern New York. The company is in the process of preparing its annual financial statements for the fiscal year ended May 31, 2014, and Jim Alcide, controller for Garcia, has gathered the following data concerning inventory.

At May 31, 2014, the balance in Garcia's Raw Materials Inventory account was $527,544 and Allowance to Reduce Inventory to Market had a credit balance of $26,560. Alcide summarized the relevant inventory cost and market data at May 31, 2014, in the schedule below.

Alcide assigned Patricia Devereaux, an intern from a local college, the task of calculating the amount that should appear on Garcia's May 31, 2014, 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.

	Cost	Replacement Cost	Sales Price	Net Realizable Value	Normal Profit
Aluminum siding	$90,510	$80,813	$82,752	$72,408	$6,594
Cedar shake siding	111,198	102,664	121,542	109,646	9,568
Louvered glass doors	144,816	160,332	241,015	217,612	23,921
Thermal windows	181,080	162,918	200,156	181,020	19,912
Total	$527,544	$506,727	$645,465	$580,686	$59,995

a1) Determine the proper balance in Allowance to Reduce Inventory to Market at May 31, 2014.

Balance in the Allowance to Reduce Inventory to Market $ _____

(a2) For the fiscal year ended May 31, 2014, 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 loss $ _____

Answer rating: 100% (QA)

Particulars Cost Replacement cost NRV Ceiling NRV less Normal Profit Floor Aluminum Siding 90510 808... View the full answer