Question

Exercise 8-23 The following information relates to the Richard Miller Company. Price Index Date Ending Inventory (End-of-Year Prices) $ 66,900 103,194 110,940 124,887 115,787 December 31, 2016 December 31, 2017 December 31, 2018 December 31, 2019 December 31, 2020 100 117 Nm w 139 Use the dollar-value LIFO method to compute the ending inventory for Miller Company for 2016 through 2020. Ending Inventory ____ 2016 $ 2017 2018 2019 + $ 2020 +

Answer 1

First, we need to add two new columns to the original information given in the problem. one to show the inventory at base-year-prices and one to show the changes in inventory from prior year. It is done as follows:Now we can compute the dollar inventory value:

Pria Inden change kompridye Orwerty of bore yopic $ 66900 $ 88,000 $ 01,300 Date Soventory 31 Dec, 0016 |66,900 31. 12, 2017 103,194 31 Dec, 3018 $110,940 31 Dec, 2019 44847887 31 Dec, 2030 $15,787 $ 86,000 $ (0,200) $ 93,900 $ 7900 $ 83.300 $(10,600)

1)The price index of 2017 has been used because no layer has been formed during the year 2018. The ending inventory at base year price($86,000)is less than the beginning inventory at base price year prices($88,200).

December 31, 2016 $66,900 @ 1.00 $66,900 December 31, 2017 $ 66,900 @ 1.00 21,300 @ 1.17 1$ 66,900 18 04,921 491,881 December 31, 2018 $ 66,900 @ 1.00 $ 19,100 @ 1.177 1466,900 If 02, 347 1489847 December 31, 2019 $ 66,900 @ 1.00 $ 19,100 @ 1.17 1,900 @.133 1866,900 $ 00:347 1$ 10,507 $99,754 December 31, 20 do $ 66,900 @ 1.00 $ 16,400 @ 1.17* 1666,900 $19,188 $ 86,088

2) The price index of 2017 has been used because no layer has been formed during the year 2020 and the amount exceeds the 2019.

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