Question

On January 1, 2021, Avondale Lumber adopted the dollar-value LIFO inventory method. The inventory value for its one inventory pool on this date was $320,000. An internally generated cost index is used to convert ending inventory to base year. Year-end inventories at year-end costs and cost indexes for its one inventory pool were as follows:

Year Ended	Inventory			Cost Index
December 31	Year-End Costs			(Relative to Base Year)
2021	$	401,700		1.03
2022		413,020		1.07
2023		463,320		1.08
2024		498,945		1.11

Required:
Calculate inventory amounts at the end of each year. (Round intermediate calculations and final answers to the nearest whole dollars.)
  

Inventory Layers Converted to Base Year Cost Inventory Layers Converted to Cost Inventory DVL Cost Date Inventory at Year-End Cost Year-End Cost Index Inventory Layers at Base Year Cost Inventory Layers at Base Year Cost Year-End Cost Index = Inventory Layers Converted to Cost 01/01/2021 $320,000selected answer correct ÷selected answer correct 1.00selected answer correct = $320,000selected answer correct Base $320,000selected answer correct ×selected answer correct 1.00selected answer correct = $320,000selected answer correct $320,000 12/31/2021 $401,700selected answer correct ÷selected answer correct 1.03selected answer correct = $390,000selected answer correct Base $320,000selected answer correct ×selected answer correct 1.00selected answer correct = $320,000selected answer correct 2021 $70,000selected answer correct ×selected answer correct 1.03selected answer correct = $72,100selected answer correct $392,100 12/31/2022 $413,020selected answer correct ÷selected answer correct 1.07selected answer correct = $386,000selected answer correct Base $320,000selected answer correct ×selected answer correct 1.00selected answer correct = $320,000selected answer correct 2021 $66,000selected answer correct ×selected answer correct 1.03selected answer correct = $67,980selected answer correct 2022 not attempted +selected answer incorrect not attempted = not attempted $387,980 12/31/2023 $463,320selected answer correct ÷selected answer correct 1.08selected answer correct = $429,000selected answer correct Base $320,000selected answer correct ×selected answer correct 1.00selected answer correct = $320,000selected answer correct 2021 $66,000selected answer correct ×selected answer correct 1.03selected answer correct = $67,980selected answer correct 2022 not attempted ×selected answer incorrect 1.07selected answer incorrect = not attempted 2023 not attempted ×selected answer correct 1.08selected answer correct = not attempted $387,980 12/31/2024 $498,945selected answer correct ÷selected answer correct 1.11selected answer correct = $449,500selected answer correct Base $320,000selected answer correct ×selected answer correct 1.00selected answer correct = $320,000selected answer correct 2021 $66,000selected answer correct ×selected answer correct 1.00selected answer incorrect = $67,980selected answer correct 2022 not attempted ×selected answer incorrect 1.08selected answer incorrect = not attempted 2023 not attempted ×selected answer correct 1.07selected answer incorrect = not attempted 2024 not attempted ×selected answer correct 1.03selected answer incorrect = not attempted $387,980

Answer 1

Solution:

Date	Inventory layer converted to base year cost					Inventory layers converted to cost						Ending inventory DVLCost
	Inventory at year end cost	/	Year end cost index		Inventory layer at base year cost		Inventory layer at base year cost	*	Year end cost index	=	Inventory layer converted to costs
1-Jan-21	$320,000.00	/	1.00		$320,000.00	Base	$320,000.00	*	1	=	$320,000.00	$320,000.00
31-Dec-21	$401,700.00	/	1.03		$390,000.00	Base	$320,000.00	*	1	=	$320,000.00
						2021	$70,000.00	*	1.04	=	$72,800.00	$392,800.00
31-Dec-22	$413,020.00	/	1.07		$386,000.00	Base	$320,000.00	*	1	=	$320,000.00
						2021	$66,000.00	*	1.04	=	$68,640.00
						2022	$0.00	*	1.07	=	$0.00	$388,640.00
31-Dec-23	$463,320.00	/	1.08		$429,000.00	Base	$320,000.00	*	1	=	$320,000.00
						2021	$66,000.00	*	1.04	=	$68,640.00
						2022	$0.00	*	1.07	=	$0.00
						2023	$43,000.00	*	1.08	=	$46,440.00	$435,080.00
31-Dec-24	$498,945.00	/	1.11		$449,500.00	Base	$320,000.00	*	1	=	$320,000.00
						2021	$66,000.00	*	1.04	=	$68,640.00
						2022	$0.00	*	1.07	=	$0.00
						2023	$43,000.00	*	1.08	=	$46,440.00
						2024	$20,500.00	*	1.11	=	$22,755.00	$457,835.00