E9. Dollar-Value LIFO, No Liquidation. Joe the Grocer Markets, Inc. (JTGM) adopt

Question

E9. Dollar-Value LIFO, No Liquidation. Joe the Grocer Markets, Inc. (JTGM) adopted the dollar-value LIFO inventory method using 2018 as the base year. JTGM uses FIFO for its internal books. Information related to its inventory is presented in the following table: Ending Inventory at End-of-Year Prices per Internal Books Year 2018 2019 2020 $ 870,000 980,000 1,050,000 Cumulative Price Index 100 102 103 Required » a. b. c. Compute JTGM's ending inventory under the dollar-value LIFO method for the years 2018 through 2020 Prepare the journal entries for 2019 and 2020 to adjust inventory to the dollar-value LIFO basis. Determine the ending balance of the LIFO reserve for 2019 and 2020

Explanation / Answer

Ending inventory Base Layer Total $ value LIFO ending inventory Dollar value LIFO method $value LIFO LIFO Year Ending inventory Price Index Base Layer Price Index RESERVE 2018 8,70,000 100% 870000 870000 100% 870000 870000 2019 980000 102% 960784 870000 100% 870000 90784 102% 92600 962600 17400 2020 1050000 103% 1019417 870000 100% 870000 90784 102% 92600 58633 103% 60392 1022992 27008

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