Skysong Company cans a variety of vegetable-type soups. Recently, the company de

Question

Skysong 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:

Dec. 31, 2013 $77,300 100

Dec. 31, 2014 132,858 121

Dec. 31, 2015 129,168 138

Dec. 31, 2016 153,900 150

Dec. 31, 2017 173,880 161

Dec. 31, 2018 206,913 167

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.

Ending Inventory:

2013 $

2014 $

2015 $

2016 $

2017 $

2018 $

Explanation / Answer

Solution:

Computation of inventory at base year prices and change from prior year - Skysong Company Date Inventory at end of year prices Price index (Percentage) Inventory at base year prices Change from Prior Years 31-Dec-13 $77,300.00 100 $77,300.00 $0.00 31-Dec-14 $132,858.00 121 $109,800.00 $32,500.00 31-Dec-15 $129,168.00 138 $93,600.00 -$16,200.00 31-Dec-16 $153,900.00 150 $102,600.00 $9,000.00 31-Dec-17 $173,880.00 161 $108,000.00 $5,400.00 31-Dec-18 $206,913.00 167 $123,900.00 $15,900.00

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