Dollar-Value LIFO Retail Intella Inc. adopted the dollar-value retail LIFO metho

Question

Dollar-Value LIFO Retail

Intella Inc. adopted the dollar-value retail LIFO method on January 1, 2015. The following data apply to the 4 subsequent years:

In addition, the following price indexes are available:

Required:

Compute the inventory at the end of each of the 4 years. Round the cost-to-retail ratio to 3 decimal places and the final answers to the nearest dollar.

Feedback

Cost Retail Cost Retail 2015 Inventory, January 1 $40,000 $ 80,000 2017 Purchases $117,600 $280,000 Purchases 85,500 190,000 Sales — 260,000 Sales — 200,000 2018 Purchases 147,200 320,000 2016 Purchases 92,000 230,000 Sales — 300,000 Sales — 210,000

Explanation / Answer

Dear Student,

Calculation of closing Inventory is provided in the below table:

13,333

(B)-(A)

19,048

(C)-(B)

19,048

(D)-(C)

19,048

(E)-(D)

80,000

(Inventory at vbase year price as the change from prior year is negative)

86,286

[80,000+(85,714-80,000)*1.10]

109,143

[86,286+(19,048*1,20)]

132,952

[109,143+(19,048*1.25)]

Regards,

(Prices at Retail) (A) (B) (C) (D) (E) Year 2014 2015 2016 2017 2018 Inventory (Beginning) ($) 80,000 70,000 90,000 110,000 Add: Purchases ($) 190,000 230,000 280,000 320,000 Less: Sales ($) -200,000 -210,000 -260,000 -300,000 Closing Inventory ($) 80,000 70,000 90,000 110,000 130,000 Price Index 1.00 1.05 1.10 1.20 1.25 Inventory at base year prices (Closing Inventory/Price Index) 80,000 66,667 85,714 104,762 123,810 Change from prior year 0

13,333

(B)-(A)

19,048

(C)-(B)

19,048

(D)-(C)

19,048

(E)-(D)

Dollar Value Inventory

80,000

(Inventory at vbase year price as the change from prior year is negative)

86,286

[80,000+(85,714-80,000)*1.10]

109,143

[86,286+(19,048*1,20)]

132,952

[109,143+(19,048*1.25)]

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