5. Problem 8-14 Dollar-value LIFO [LO8-8] Kingston Company uses the dollar-value
ID: 2353907 • Letter: 5
Question
5.
Problem 8-14 Dollar-value LIFO [LO8-8]
Kingston Company uses the dollar-value LIFO method of computing inventory. An external price index is used to convert ending inventory to base year. The company began operations on January 1, 2013, with an inventory of $220,000. Year-end inventories at year-end costs and cost indexes for its one inventory pool were as follows:
Calculate inventory amounts at the end of each year.
Kingston Company uses the dollar-value LIFO method of computing inventory. An external price index is used to convert ending inventory to base year. The company began operations on January 1, 2013, with an inventory of $220,000. Year-end inventories at year-end costs and cost indexes for its one inventory pool were as follows:
Explanation / Answer
date
inventory at base year cost
inventory layers
year of layer
inventory at added year cost
inventory at dollar vaue lifo
1/1/2013
220,000
220,000
base year
220,000
220,000
12/31/2013
263,000
220,000
base year
220,000
43,000
2,013
46,010
266,010
12/31/2014
296,000
220,000
base year
220,000
43,000
2,013
46,010
33,000
2,014
38,280
304,290
12/31/2015
292,000
220,000
base year
220,000
43,000
2,013
46,010
29,000
2,014
33,640
299,650
12/31/2016
293,300
220,000
base year
220,000
43,000
2,013
46,010
29,000
2,014
33,640
1,300
2,016
1,417
301,067
date
inventory at dollar value LIFO
1/1/2013
220,000
12/31/2013
266,010
12/31/2014
304,290
12/31/2015
299,650
12/31/2016
301,067
To convert to inventory at base year cost divide by the appropriate index. To convert to inventory at added year cost multiply by the appropriate index.
date
inventory at base year cost
inventory layers
year of layer
inventory at added year cost
inventory at dollar vaue lifo
1/1/2013
220,000
220,000
base year
220,000
220,000
12/31/2013
263,000
220,000
base year
220,000
43,000
2,013
46,010
266,010
12/31/2014
296,000
220,000
base year
220,000
43,000
2,013
46,010
33,000
2,014
38,280
304,290
12/31/2015
292,000
220,000
base year
220,000
43,000
2,013
46,010
29,000
2,014
33,640
299,650
12/31/2016
293,300
220,000
base year
220,000
43,000
2,013
46,010
29,000
2,014
33,640
1,300
2,016
1,417
301,067
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