A wholly owned subsidiary of J & J Products implemented Dollar Value LIFO invent

Question

A wholly owned subsidiary of J & J Products implemented Dollar Value LIFO inventory valuation in 2010, when their ending inventory was $650,000. The following are the inventory amounts for an ingredient used in packaging for years 2011 – 2015. The price index has been increasing by 5% each year 2011 through 2015.

Inventory at End of Year Prices Year for example 497 1.05 = 548163 200 x1.05 522060 then 522060 x 2011 2012 2013 2014 2015 $497.200 $595,800 $605,200 $656,500 $701,800 Calculate the ending inventory for years 2011 - 2015 using Dollar Value LIFO.

Explanation / Answer

Solution :

Computation of inventory at base year prices and change from prior year - J&J Products Year Inventory at end of year prices Price index (Percentage) Inventory at base year prices Change from Prior Years 2011 $497,200.00 100 $497,200 $0 2012 $595,800.00 105 $567,429 $70,229 2013 $605,200.00 110.25 $548,934 -$18,494 2014 $656,500.00 115.7625 $567,109 $18,175 2015 $701,800.00 121.550625 $577,373 $10,263

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