Question

Chapter 8 Assessment On January 1, 2021, the National Furniture Company adopted the dollar-value LIFO method of computing inventory. An internal cost index is used to convert ending inventory to base year. Inventory on January 1 was $220,000. Year-end inventories at year-end costs and cost indexes for its one inventory pool were as follows: 1 Cost Index (Relative to Base Year) Inventory at Year-end Year Ended December 31 Costs $302,400 364,800 368,000 1.e8 2021 2822 2023 0028 41 1.12 1.15 Required: Compute inventory amounts at the end of each year using the dollar-value LIFO method Ending Date Inventory DVL Cost 12/312021 12/31/2022 12/31/2023

Answer 1

Solution:

Computation of inventory at base year prices and change from prior year Inventory at end of Cost index Inventory at base year Change from Period year prices (Percentage) prices Prior Years 01-Jan-21 $220,000 1 $220,000 31-Dec-21 $302,400 1.08 $280,000 $60,000 31-Dec-22 $364,000 1.12 $325,000 $45,000 31-Dec-23 $368,000 1.15 $320,000 $5,000 $0 18 20 22 40 43 44 45 et684 Sheet248 (7) Sheet653 Sheet655 Sheet248 (8)

M 10 Computation of dollar value inventory - LIFO Particulars Amount December 31, 2021: $220000*1 $220,000 $60000*1.08 $64,800 Inventory at Dec 31, 2021 $284,800 11 12 13 14 15 16 17 December 31, 2022: $220000*1 $60000*1.08 $45000*1.12 Inventory at Dec 31, 2022 $220,000 $64,800 $50,400 $335,200 18 19 20 December 31, 2023: $220000*1 $60000*1.08 ($45000-$5000)*1.12 Inventory at Dec 31, 2023 $220,000 $64,800 $44,800 $329,600 24 25 26 27 28 29 30 31 32 33 34 35 36 37 et684 Sheet248 (7) Sheet653 Sheet655 Sheet248 (8)