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 $275,000. Year-end inventories at year-end costs and cost indexes for its one inventory pool were as follows: Year Ended December 31 2021 Ending Inventory at Year-End Costs $378,000 480, 260 456, 550 440,000 Cost Index (Relative to Base Year) 1.08 1. 18 1. 15 1. 10 2022 2023 2024 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					DVL inventory Cost
Date	Inventory at year end cost	/	Year end cost index	=	Inventory at base year cost		Inventory at base year cost	*	Year end cost index	=	Inventory layers converted to cost
01/01/2021	275000	/	1	=	275000	Base	275000	*	1	=	275000
12/31/2021	378000	/	1.08	=	350000	base	275000	*	1	=	275000
						2021	75000	*	1.08	=	81000	356000
12/31/2022	480260	/	1.18	=	407000	Base	275000	*	1	=	275000
						2021	75000	*	1.08	=	81000
						2022	57000	*	1.18	=	67260	423260
12/31/2023	456550	/	1.15	=	397000	Base	275000	*	1	=	275000
						2021	57000	*	1.08	=	81000
						2022	47000	*	1.18	=	55460	411460
12/31/2024	440000	/	1.10	=	400000	Base	275000	*	1	=	275000
						2021	57000	*	1.08	=	81000
						2022	47000	*	1.18	=	55460
						2024	3000	*	1.1	=	3300	414760