MON CUMpany uses the dollar-value LIFO method of computing inventory. An externa
ID: 2571534 • Letter: M
Question
MON CUMpany uses the dollar-value LIFO method of computing inventory. An external price i to convert ending inventory to base year. The company began operations on January 1,2018, with an in etows of $ 150,000. Year-end inventories at year-end costs and cost indexes for its one inventory pool we re as follows: Year Ended December 31 Ending Inventory at Year-End Costs 2018 2019 2020 2021 $200,000 245,700 235,980 228,800 Cost Index (Relative to Base Year) 1.08 1.17 1.14 1.10 equired: alculate inventory amounts at the end of each year.Explanation / Answer
year
Ending inventory
Cost index
Inventory at base year prices
(A)
(B)
(C=A/B)
2017
$150,000
1
$150,000
2018
$200,000
1.08
$185,185.19
2019
$245,700
1.17
$210,000.00
2020
$235,980
1.14
$207,000.00
2021
$228,800
1.1
$208,000.00
Calculation of ending inventory:
31-Dec-17
$150,000*1.00
$150,000
31-Dec-18
$150,000*1.00
$150,000
$35,185*1.08
$38,000
Balance
$188,000
31-Dec-19
$150,000*1.00
$150,000
$35,185*1.08
$38,000
$24,815*1.17
$29,034
Balance
$217,033
31-Dec-20
$150,000*1.00
$150,000
$35,185*1.08
$38,000
$21,815*1.17
$25,524
Balance
$213,523
31-Dec-21
$150,000*1.00
$150,000
$35,185*1.08
$38,000
$21,815*1.17
$25,524
$1,000*1.1
$1,100
Balance
$214,623
year
Ending inventory
Cost index
Inventory at base year prices
(A)
(B)
(C=A/B)
2017
$150,000
1
$150,000
2018
$200,000
1.08
$185,185.19
2019
$245,700
1.17
$210,000.00
2020
$235,980
1.14
$207,000.00
2021
$228,800
1.1
$208,000.00
Calculation of ending inventory:
31-Dec-17
$150,000*1.00
$150,000
31-Dec-18
$150,000*1.00
$150,000
$35,185*1.08
$38,000
Balance
$188,000
31-Dec-19
$150,000*1.00
$150,000
$35,185*1.08
$38,000
$24,815*1.17
$29,034
Balance
$217,033
31-Dec-20
$150,000*1.00
$150,000
$35,185*1.08
$38,000
$21,815*1.17
$25,524
Balance
$213,523
31-Dec-21
$150,000*1.00
$150,000
$35,185*1.08
$38,000
$21,815*1.17
$25,524
$1,000*1.1
$1,100
Balance
$214,623
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