Question

The following information relates to the Jimmy Johnson Company. Ending Inventory Price Date (End-of-Year Prices) Index December 31, 2016 $70,000 100 December 31, 2017 90,300 105 December 31, 2018 95.120 116 December 31, 2019 105,600 120 December 31, 2020 100,000 125 Use the dollar-value LIFO method to compute the ending inventory for Johnson Company for 2016 through 2020. Ending Inventory 2016 $ 2017 $ 2018 2019 2020

Answer 1

Solution Inventory Layers Converted to Base Year Cost Inventory Layers Converted to Cost Year Inventory at Year- End Cost Year-End Cost Index Inventory Layers at Base year Cost $70,000 $86,000 Year-End Cost Index 2016 2017 $70,000 $90,300 1.05 = x x x X X 2018 Inventory | Ending Layers Inventory converted DVL Cost to Cost $70,000 $70,000 $70,000 $21,315 $91,315 $70,000 $12,600 $0 . $82,600 $70,000 $12,600 $95,120 W 1.16 = $82,000 1.05 Inventory Layers at Base year Cost $70,000 $70,000 $20,300 $70,000 $12,000 SO $70,000 $12,000 $0 $6,000 $70,000 $10,000 $0 $0 $0 1.16 2019 $ 105,600 1.20 2016 2016 2017 2016 2017 2018 2016 2017 2018 2019 2016 2017 2018 2019 2020 = $88,000 1.05 = x X X X $o 1.16 1.20 $89,800 2020 $100,000 $80,000 x x x x 1.05 1.16 1.20 1.25 = = = = $7,200 $70,000 $10,500 $0 $0 2016 2017 2018 2019 2020 Ending Inventory $70,000 $91,315 $82,600 $89,800 $80,500