Question

The following information relates to the Jimmy Johnson Company.

Date		Ending Inventory (End-of-Year Prices)				Price 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:

Date	Inventory at end of year prices	Price index (Percentage)	Inventory at base year prices	Change from Prior Years
31-Dec-16	$70,000	100	$70,000	$0
31-Dec-17	$90,300	105	$86,000	$16,000
31-Dec-18	$95,120	116	$82,000	-$4,000
31-Dec-19	$1,05,600	120	$88,000	$6,000
31-Dec-20	$1,00,000	125	$80,000	-$8,000

Computation of dollar value inventory - LIFO
Particulars	Amount
December 31, 2016:
$70000*100%	$70,000
December 31, 2017:
$70000*100%	$70,000
$16000*105%	$16,800
Inventory at Dec 31, 2017	$86,800
December 31, 2018:
$70000*100%	$70,000
($16000- $4000)*105%	$12,600
Inventory at Dec 31, 2018	$82,600
December 31, 2019:
$70000*100%	$70,000
($16000- $4000)*105%	$12,600
$6000*120%	$7,200
Inventory at Dec 31, 2019	$89,800
December 31, 2020:
$70000*100%	$70,000
[$16000- $4000 -($8000 -$6000)]*105%	$10,500
($6000- $6000)*120%	$0
Inventory at Dec 31, 2020	$80,500