Question

Kingston Company uses the dollar-value LIFO method of computing inventory. An external price index is used to convert ending inventory to base year. The company began operations on January 1, 2021, with an inventory of $270,000. Year-end inventories at year-end costs and cost indexes for its one inventory pool were as follows: Year Ended December 31 2021 2022 2023 2024 Ending Inventory at Year-End Costs $343,400 435,600 413,020 401,700 Cost Index (Relative to Base Year) 1.01 1.10 1.07 1.03 Required: Calculate inventory amounts at the end of each year. (Round intermediate calculations and final answers to the nearest whole dollars.)

Answer 1

	Inventory at base year cost						Inventory layers converted to cost					Inventory DVL cost
Date	Inventory at year end cost	/	year end price index	=	Inventory at base year cost		Inventory at base year cost	*	Year end price index	=	Inventory layers converted to cost
01/01/2021	270000	/	1	=	270000	Base	270000	*	1	=	270000
12/31/2021	343400	/	1.01	=	340000	Base	270000	*	1	=	270000
						2021	70000	*	1.01	=	70700	340700
12/31/2022	435600	/	1.10	=	396000	Base	270000	*	1	=	270000
						2021	70000	*	1.01	=	70700
						2022	56000	*	1.1	=	61600	402300
12/31/2023	413020	/	1.07	=	386000	Base	270000	*	1	=	270000
						2021	70000	*	1.01	=	70700
						2022	46000	*	1.1	=	50600	391300
12/31/2024	401700	/	1.03	=	390000	Base	270000	*	1	=	270000
						2021	70000	*	1.01	=	70700
						2022	46000	*	1.1	=	50600
						2024	4000	*	1.03	=	4120	395420