Problem 99 Cost Market Maddox Specialty Company Balance Shee

Problem 9-9

Cost

Market

Maddox Specialty Company
Balance Sheet
November 30, 2015

Problem 9-9

Maddox Specialty Company, a division of Lost World Inc., manufactures three models of gear shift components for bicycles that are sold to bicycle manufacturers, retailers, and catalog outlets. Since beginning operations in 1990, Maddox has used normal absorption costing and has assumed a first-in, first-out cost flow in its perpetual inventory system. The balances of the inventory accounts at the end of Maddox’s fiscal year, November 30, 2014, are shown below. The inventories are stated at cost before any year-end adjustments.

Finished goods		$675,950
Work in process		126,200
Raw materials		280,100
Factory supplies		72,500

The following information relates to Maddox’s inventory and operations.

1. The finished goods inventory consists of the items analyzed below.

	Cost	Market
Down tube shifter
Standard model	$ 71,300	$ 70,600
Click adjustment model	95,420	91,370
Deluxe model	117,000	114,400
Total down tube shifters	283,720	276,370
Bar end shifter
Standard model	83,520	92,490
Click adjustment model	106,500	104,700
Total bar end shifters	190,020	197,190
Head tube shifter
Standard model	78,410	77,920
Click adjustment model	123,800	126,100
Total head tube shifters	202,210	204,020
Total finished goods	$675,950	$677,580

2.		One-half of the head tube shifter finished goods inventory is held by catalog outlets on consignment.
3.		Three-quarters of the bar end shifter finished goods inventory has been pledged as collateral for a bank loan.
4.		One-half of the raw materials balance represents derailleurs acquired at a contracted price 20% above the current market price. The market value of the rest of the raw materials is $134,300.
5.		The total market value of the work in process inventory is $115,700.
6.		Included in the cost of factory supplies are obsolete items with an historical cost of $4,670. The market value of the remaining factory supplies is $69,200.
7.		Maddox applies the lower-of-cost-or-market method to each of the three types of shifters in finished goods inventory. For each of the other three inventory accounts, Maddox applies the lower-of-cost-or-market method to the total of each inventory account.
8.		Consider all amounts presented above to be material in relation to Maddox’s financial statements taken as a whole.

(a)

Prepare the inventory section of Maddox’s balance sheet as of November 30, 2015. (Round answers to 0 decimal places, e.g. 2,550.)

Maddox Specialty Company Balance Sheet November 30, 2015
$\"\"$ Current AssetsCurrent LiabilitiesIntangible AssetsLong-term InvestmentsLong-term LiabilitiesProperty, Plant and EquipmentStockholders\' EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders\' EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal Stockholders\' Equity
$\"\"$ Total InventoriesFinished GoodsRaw MaterialsInventoryFactory SuppliesWork-in-Process
$\"\"$ Total Inventories Finished Goods Factory Supplies Work-in-Process Raw Materials Inventory	$ $\"\"$
$\"\"$ Total Inventories Work-in-Process Finished Goods Factory Supplies Raw Materials Inventory	$\"\"$
$\"\"$ Total Inventories Inventory Work-in-Process Finished Goods Factory Supplies Raw Materials	$\"\"$
$\"\"$ Inventory Work-in-Process Finished Goods Factory Supplies Raw Materials Total Inventories	$\"\"$
$\"\"$ Raw Materials Inventory Total Inventories Finished Goods Work-in-Process Factory Supplies		$ $\"\"$

Current assets: Inventories Raw material (Note:1) 251008 Work In process (Note:2) 115700 Finished goods (Note:3) 668600 Factory supplies (Note:4) 67830 1103138 Notes: 1. Raw materials Cost Market LCM derailleur 140050 116708 116708 (280100*1/2) (140050/1.20) Remaining 140050 134300 134300 (280100*1/2) 280100 251008 251008 2. Work in process Cost Market LCM Work in process 126200 115700 115700 3. Finished goods Cost Market LCM Down tube shifter 283720 276370 276370 Bar end shifter 190020 197190 190020 Head tube shifter 202210 204020 202210 675950 677580 668600 4. Factory supplies Cost Market LCM Balance 72500 Less: obsolete items 4670 67830 69200 67830

Problem 9-9 Cost Market Maddox Specialty Company Balance Sheet November 30, 2015 Problem 9-9 Maddox Specialty Company, a division of Lost World Inc., manufactur

Problem 99 Cost Market Maddox Specialty Company Balance Shee

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