Bridgeport 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 Bridgeport, has gathered the following data concerning inventory. At May 31, 2017, the balance in Bridgeport’s Raw Materials Inventory account was $469,200, and Allowance to Reduce Inventory to NRV had a credit balance of $27,400. 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 Bridgeport’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 $80,500 $73,600 $64,400 Cedar shake siding 98,900 108,100 97,520 Louvered glass doors 128,800 214,360 193,545 Thermal windows 161,000 178,020 161,000 Total $469,200 $574,080 $516,465
Determine the proper balance in Allowance to Reduce Inventory to NRV at May 31, 2017.
Balance in the Allowance to Reduce Inventory to NRV $ Link to Text Link to Text
For the fiscal year ended May 31, 2017, determine the amount of the gain or loss that would be recorded (using the loss method) due to the change in Allowance to Reduce Inventory to NRV. (Enter loss using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
The amount of the gain (loss)