XYZ Company manufactures one product. On 12.31.2011, the Company adopted the dol

Question

XYZ Company manufactures one product. On 12.31.2011, the Company adopted the dollar-value LIFO inventory method. The inventory on that date using the dollar-value LIFO inventory method was $280,000. Inventory data are as follows:

YEAR / Inventory at Year-End Prices / Price Index (base year 2011)

2012 / $343,200 / 1.04

2013 / 403,200 / 1.12

2014 / 391,000 / 1.15

2015 / 420,000 / 1.20

Instructions:

Compute the inventory at December 31, 2012, 2013, 2014, and 2015, using the dollar-value LIFO method for each year. Prepare the necessary journal entries for the LIFO Reserve account.

Note: I have computed the inventory at December 31, 2012 ($452,000), 2013 ($485,600), 2014 ($463,200), and 2015 ($475,200). However, I am not sure how to prepare the necessary journal entries for the LIFO Reserve account. Please respond ASAP. Thank you in advance.

Explanation / Answer

XYZ Company manufactures one product. On 12.31.2011, the Company adopted the dol

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