Question

D. Dollar-Value LIFO Albany State Company manufactures various products. On December 31, 2018, Albany State Company adopted the dollar-value LIFO method. Presented below is the following inventory data. Year 2018 Inventory at (End-of-Year Prices $70,000 Price Index 100 il 90,300 1 05 2019 2020 2021 95,120 105,600 116 1201b los DO Tsing the dollar-value LIFO method, compute the value of the inventory at December 31 for the years 2018, 2019, 2020 and 2021.

Answer 1

Year	Inventory at End-of -Year-Prices	Price index	Inventory at base year prices	Change from prior year
31-Dec-18	$        70,000	100	$           70,000	$                    -
31-Dec-19	$        90,300	105	$           86,000	$           16,000
31-Dec-20	$        95,120	116	$           82,000	$           (4,000)
31-Dec-21	$    1,05,600	120	$           88,000	$             6,000

Dollor Value Inventory

31-Dec-18
$70,000 @ 1.00	$        70,000
31-Dec-19
$70,000 @ 1.00	$        70,000
$16,000 @ 1.05	$        16,800
	$        86,800
31-Dec-20
$70,000 @ 1.00	$        70,000
$12,000 @ 1.05*	$        12,600
	$        82,600
31-Dec-21
$70,000 @ 1.00	$        70,000
$12,000 @ 1.05	$        12,600
$6,000 @ 1.20	$          7,200
	$        89,800

Note

* 2019 price index has been used because no layer has been formed during 2020.The ending inventory value of $82,000 less than the beginning inventory value of $86,000.