Question

Computing Ending Inventory using Dollar-Value LIFO On January 1, 2020, Benn Company changed from FIFO to LIFO for income tax and external reporting purposes. At that date, the beginning FIFO inventory (the base inventory for LIFO purposes) was $224,000. The following information is available from Benn's records for the years 2020 through 2023. Year Ending Inventory on a FIFO Basis Price Index 2020 $264,000 2021 278,400 2022 322,400 1.3 1.1 1.2 2023 320,000 1.2 Required Compute the ending inventory on a dollar-value LIFO basis for each year, 2020 through 2023. Note: Do not round until your final answer. Round your final answer to the nearest whole dollar Dollar-value LIFO ending inventory, 2020 $ Dollar-value LIFO ending inventory, 2021 $ 0 Dollar-value LIFO ending inventory, 2022 $ Dollar-value LIFO ending inventory, 2023 $

Answer 1

Answer:-

Inventory at Date end-of-year price Base year 224000 2020 264000 2021 278400 20221 322400 2023| 320000 Price index Inventory at Change from base year percentage prior year price 224000 1.11 240000 16000 2320001 -8000 1.3 248000 16000 1.21 266667 18667 1.2

Base year $224,000 @1.00 $ 2,24,000 Year 2020 $224,000 @1.00 $16,000 @1.1 Dollar-value LIFO ending inventory $ $ $ 2,24,000 17,600 2,41,600 Year 2021 $224,000 @1.00 $8,000 @1.1 Dollar-value LIFO ending inventory $ $ $ 2,24,000 8,800 2,32,800 Year 2022 $224,000 @1.00 $16,000 @1.1 $8,000 @1.3 Dollar-value LIFO ending inventory $ $ $ $ 2,24,000 17,600 10,400 2,52,000 Year 2023 $224,000 @1.00 $ $16,000 @1.1 $ $8,000 @1.3 $ $2,667 @1.2 $ Dollar-value LIFO ending inventory | $ 2,24,000 17,600 10,400 32,004 2,84,004

Note: For year 2021, the price index of 2020 has been used because no layer has been formed during the year 2021. The ending inventory at base-year-prices ($232,000) is less than the beginning inventory at base-year-prices ($240,000).