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Q-11: The Golden Company is in the process of preparing its annual financial statements for the fiscal year ended August 31, 2019. Yousaf, controller for Golden, has gathered the following data concerning inventory. At August 31, 2019, the balance in Golden's Raw Materials Inventory account was 408,000, and Allowance to Reduce Inventory to NRV had a credit balance of 27,500. Youaf summarized the relevant inventory cost and market data at August 31, 2019, in the schedule below. Youaf assigned Salam, an intern from a local college, the task of calculating the amount that should appear on Golden's August 31, 2019, financial statements for inventory under the LCNRV rule as applied to each item in inventory. Salam expressed concern over departing from the historical cost principle. Cost Sales Price Net Realizable Value Aluminum siding 70,000 64.000 56,000 Louvered glass doors 112,000 186,400 168,300 Thermal windows 140.000 154,800 140,000 Total 322,000 405,200 364,300 Instructions: m). Determine the proper balance in Allowance to Reduce Inventory to Net Realizable Value at August 31, 2019. (). For the fiscal year ended August 31, 2019, 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 Net Realizable Value. (). Explain the rationale for the use of the Lower of cost or net realizable value rule as it applies to inventories

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