Problem 8-11 Richardson Company cans a variety of vegetable-type soups. Recently
ID: 2445527 • Letter: P
Question
Problem 8-11
Richardson 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 2010 through 2015 using dollar-value LIFO.
Date
Ending Inventory
(End-of-Year Prices)
Price Index
Dec. 31, 2010 $64,600 100 Dec. 31, 2011 168,461 157 Dec. 31, 2012 164,340 180 Dec. 31, 2013 188,762 194 Dec. 31, 2014 226,974 209 Dec. 31, 2015 266,476 217Explanation / Answer
Computation of Ending inventory using Dollar value LIFO
Date Ending inventory Price index(%) Inventory at base year price change from prior year
Dec 31, 2010 64600 100 64600 -
Dec31, 2011 168461 157 107300 53870
Dec31, 2012 164340 180 91300 (16000)
Dec31, 2013 188762 194 97300 6000
Dec31, 2014 226974 209 108600 11300
Dec31, 2015 266476 217 122800 14200
Dec31, 2010 ending inventory :
64600@1.00 = 64600
Dec31, 2011 ending inventory :
64600@1.00 = 64600
168461@1.57 = 264483.77
Dec31, 2012 ending inventory :
64600@1.00 = 64600
152461@1.57 = 239363.77
Dec31, 2013 ending inventory :
64600@1.00 = 64600
152461@1.57 = 239363.77
6000 @1.94 = 11640
Dec31, 2014 ending inventory :
64600@1.00 = 64600
152461@ 1.57 = 239363.77
6000 @ 1.94 = 11640
11300 @ 2.09 = 23617
Dec31, 2015 ending inventory :
64600@ 1.00 = 64600
152461 @ 1.57 = 239363.77
6000@1.94 = 11640
11300@2.09 = 23617
14200 @2.17 = 30814.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.