Question

Problem V: (6 pts) Linton Corp. adopted the dollar-value LIFO (DVL) method on December 31, 2018 (base year). Information regarding inventory for 2018 - 2020 is as follows: Date 12/31/18 12/31/19 12/31/20 Ending Inventory at Current Prices (FIFO) $ 580,000 715,000 739,200 Price Index 100% or 1.0 110% or 1.10 112% or 1.12 Question: What should be the cost of inventory at 12/31/20 using the DVL method? Round all calculations to the nearest whole dollar. Reminder: show clear calculations to receive partial credit. Answer: $ Space for calculations: (add space or paper if necessary)

Answer 1

answer v) calculation of cost of inventory using DVL method :

date	ending inventory at the end of the year	price index	inventory base year prices	change from prior year
12/31/18	$580000	100% or 1.00	$580000 x 100/100 = $580000	$0
12/31/19	$715000	110% or 1.10	$715000 x 100/110 = $650000	$650000 - $580000 = $70000
12/31/20	$739200	112% or 1.12	$739200 x 100/112 = $660000	$660000 - $650000 = $10000

computation of cost of inventory :

12/31/18 :
$580000 @ 1.00	$580000
12/31/19 :
$580000 @ 1.00	$580000
add : $70000 @ 1.10	$77000
cost of inventory	$657000
12/31/20 :
$580000 @ 1.00	$580000
add : $70000 @ 1.10	$77000
add : $10000 @ 1.12	$11200
cost of inventory	$668200

cost of inventory at 12/31/20 using DVL method

$668200

answer vi) computaion of cost of goods sold and ending inventory using weighted average method :

		goods received or purchased	goods sold or cost of goods sold	ending inventory
date	particular	no. of units	cost per unit in $	no. of units	cost per unit in $	cost of goods sol;d in $	no. of units	cost per unit in $	ending inventory in $
nov. 1	beginning inventory						70	50	3500
nov. 5	purchase	30	60				100	(3500+1800)/100 = 53	5300
nov. 8	sale			40	53	2120	60	53	3180
nov. 20	purchase	90	55				150	(3180+4950)/150 = 54.2	8130
nov. 29	sale			120	54.2	6504	30	54.2	1626
	cost of goods sold and cost of ending inventory			160		8624	30		1626

	perpectual weighted average method
cost pr goods sold	$8624
cost of ending inventory	$1626

answer vii) computation of cost of goods sold and ending inventory :

a) perpetual fifo method :

		goods received or purchased	goods sold or cost of goods sold	ending inventory
date	particular	no. of units	cost per unit in $	no. of units	cost per unit in $	cost of goods sol;d in $	no. of units	cost per unit in $	ending inventory in $
july 1	beginning inventory						50	120	6000
july 6	purchases	30	130				50	120	6000
							30	130	3900
july 9	sale			50	120	6000	10	130	1300
				20	130	2600
july 20	purchase	90	140				10	130	1300
							90	140	12600
july 31	sale			10	130	1300	20	140	2800
				70	140	9800
	total of cost of goods sold and nding inventory			150		19700	20		2800

b) periodic lifo method :

		goods received or purchased	goods sold or cost of goods sold	ending inventory
date	particular	no. of units	cost per unit in $	no. of units	cost per unit in $	cost of goods sol;d in $	no. of units	cost per unit in $	ending inventory in $
july 1	beginning inventory						50	120	6000
july 6	purchases	30	130				50	120	6000
							30	130	3900
july 20	purchase	90	140				50	120	6000
							30	130	3900
							90	140	12600
july 31	sale			90	140	12600	20	120	2400
				30	130	3900
				30	120	3600
	total of cost of goods sold and nding inventory			150		20100	20		2400

c) perpetual lifo method :

		goods received or purchased	goods sold or cost of goods sold	ending inventory
date	particular	no. of units	cost per unit in $	no. of units	cost per unit in $	cost of goods sol;d in $	no. of units	cost per unit in $	ending inventory in $
july 1	beginning inventory						50	120	6000
july 6	purchases	30	130				50	120	6000
							30	130	3900
july 9	sale			30	130	3900	10	120	1200
				40	120	4800
july 20	purchase	90	140				10	120	1200
ifo	periodic lifo	perpetual					90	140	12600
july 31	sale			80	140	11200	10	120	1200
							10	140	1400
	total of cost of goods sold and nding inventory			150		19900	20		2600

	pepetual fifo	periodic lifo	perpetual lifo
cost of goods sold	$19700	$20100	$19900
cost of ending inventory	$2800	$2400	$2600

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