E8-12 Dollar-Value LIFO On January 1, 2009,the Sato Company adopted the dollar-v
ID: 2433897 • Letter: E
Question
E8-12 Dollar-Value LIFO On January 1, 2009,the Sato Company adopted the dollar-value LIFO method of inventorycosting. The company’s ending inventory records appear asfollow:
Year CurrentCost Index
2009 $40,000 100
2010 56,100 120
2011 58,500 130
2012 70,000 140
Compute the ending inventory for the year 2009, 2010, 2011, and2012, using the dollar-value LIFO method (round to the nearestdollar).
Explanation / Answer
Year
Invemtory at base yearcost
Year of Layer
Year of Layer
Inventory at added yearcost
Inventory (Dollar ValueLIFO)
2009
$40,000
2009
$40,000
$40,000
$40,000
2010
2011
$58,500 / 1.3 = $45,000
2012
$70,000 / 1.40 = $50,000
Year
Invemtory at base yearcost
Year of Layer
Year of Layer
Inventory at added yearcost
Inventory (Dollar ValueLIFO)
2009
$40,000
2009
$40,000
$40,000
$40,000
2010
56,100 / 1.20 = $46,750 20092010 $40,000 $6,750 $40,000 $8,100 $48,100
2011
$58,500 / 1.3 = $45,000
20092010 $40,000 $5,000 $40,000 $6,500 $46,500
2012
$70,000 / 1.40 = $50,000
2009 20102012 $40,000 $5,000 $5,000 $40,000 $6,500 $7,000 $53,500
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