Problem 8-11 Cheyenne Company cans a variety of vegetable-type soups. Recently,
ID: 2397444 • Letter: P
Question
Problem 8-11
Cheyenne Company cans a variety of vegetable-type soups. Recently, the company decided to value its inventories using dollar-value LIFO pools. The clerk who accounts for inventories does not understand how to value the inventory pools using this new method, so, as a private consultant, you have been asked to teach him how this new method works.
He has provided you with the following information about purchases made over a 6-year period.
Date
Ending Inventory
(End-of-Year Prices)
Price Index
You have already explained to him how this inventory method is maintained, but he would feel better about it if you were to leave him detailed instructions explaining how these calculations are done and why he needs to put all inventories at a base-year value.
Compute the ending inventory for Richardson Company for 2013 through 2018 using dollar-value LIFO.
Explanation / Answer
Ending Inventory
(End-of-Year Prices)
Price Index
Ending Inventory
2013
80200
100
(80200/100) * 100
=80200
2014
145080
130
(145080/130) * 100
=111600
2015
140954
149
(140954/149) * 100
=94600
2016
166474
161
(166474/161) * 100
=103400
2017
190008
174
(190008/174) * 100
=109200
2018
225540
180
(225540/180) * 100
=125300
Ending Inventory
(End-of-Year Prices)
Price Index
Ending Inventory
2013
80200
100
(80200/100) * 100
=80200
2014
145080
130
(145080/130) * 100
=111600
2015
140954
149
(140954/149) * 100
=94600
2016
166474
161
(166474/161) * 100
=103400
2017
190008
174
(190008/174) * 100
=109200
2018
225540
180
(225540/180) * 100
=125300
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