On January 1, 2016, Avondale Lumber adopted the dollar-value LIFO inventory meth

Question

On January 1, 2016, Avondale Lumber adopted the dollar-value LIFO inventory method The inventory value for its one inventory pool on this date was $320,000. An internally generated cost index is used to convert ending inventory to base year. Year-end inventories at year-end costs and cost indexes for its one inventory pool were as follows Cost Index (Relative to Base Year) 1.03 1.07 1.08 1.11 Year Ended Inventory December 31 Year-End Costs 2016 2017 2018 2019 $401,700 413,020 463,320 498,945 Required Calculate inventory amounts at the end of each year Ending Inventor Date 12/31/16 12/31/17 12/31/18 12/31/19

Explanation / Answer

The inventory amounts at the end of each year is calculated by multiplying the year end inventory costs by the cost index.

12/31/16 ending inventory = $ 401,700 x 1.03

12/31/16 ending inventory = $ 413,751

12/31/17 ending inventory = $ 413,020 x 1.07

12/31/17 ending inventory = $ 441,931.40

12/31/18 ending inventory = $ 463,320 x 1.08

12/31/18 ending inventory = $ 500,385.60

12/31/19 ending inventory = 498,945 x 1.11

12/31/19 ending inventory = $ 553,828.95

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