Question

E8.4B (L04) (Dollar-Value LFO) The following information relates to James Company Date Price Index December 31, 2016 Ending Inventory (End-of-Year Prices) $154,000 100 196,768 104 December 31, 2017 December 31, 2018 205,656 114 December 31, 2019 22 448 118 December 31, 2020 211,200 120 Instructions (a) Use the dollar-value LIFO method to compute the ending inventory for lames Company for 2016 through 2020. (b) Find the UFO reserve and UFO effect for each year. (c) Prepare the necessary journal entries to record the UFO effect in each period

Answer 1

Date	Inventory at end of year prices	Price Index	Inventory at base year prices	Change from prior year
2016	$154000	100	$154000	0
2017	$196768	104	$189200	+$35200
2018	$205656	114	$180400	-$8800
2019	$228448	118	$193600	+$13200
2020	$211200	120	$176000	-$17600

Ending Inventory Value LIFO:-

Dec 31st, 2016   $154000

Dec 31st, 2017 $154000 @ 1.00 = 154000

$35200 @ 1.04 = $36608

$190608

Dec 31st, 2018 $154000 @ 1.00 = $154000

$26400 @ 1.04 = $27456

$181456

Dec 31st, 2019 $154000 @ 1.00 = $154000

$26400 @ 1.04 = $27456

$13200 @ 1.18 = $15576

$197032

Dec 31st, 2020 $154000 @ 1.00 = $154000

$22000 @ 1.04 = $22880

   $176880