Windsor Corporation adopted the dollar-value LIFO retail inventory method on Jan
ID: 2580363 • Letter: W
Question
Windsor Corporation adopted the dollar-value LIFO retail inventory method on January 1, 2016. At that time the inventory had a cost of $55,000 and a retail price of $100,000. The following information is available.
Year-End
Inventory at Retail
Current Year
Cost—Retail %
Year End
Price Index
The price index at January 1, 2016, is 100.
Compute the ending inventory at December 31 of the years 2016–2019. (Round ratios for computational purposes to 0 decimal places, e.g. 78% and final answers to 0 decimal places, e.g. 28,987.)
2016
2017
2018
2019
Year-End
Inventory at Retail
Current Year
Cost—Retail %
Year End
Price Index
Explanation / Answer
Computation of Inventory at Dec.31,2016,2017,2018,2019 using dollar value LIFO method Inventory Layers Converted to Base Year Cost Inventory layers Converted to Cost Ending Inventory DYL Cost Date Inventory at year end cost (Inventory at retail * Cost Retail %) Year end cost Index Inventory layers at Base Year Cost Inventory Layers at Base Year Cost Year End cost Index Inventory Layers Converted to Cost 31/12/2015 $55,000 / 100% = $55,000 Base $55,000 x 100% = $55,000 $55,000 31/12/2016 $69,472 / 106% = $65,540 Base $55,000 x 100% = $55,000 2016 $10,540 x 106% = $11,172 $66,172 31/12/2017 $81,252 / 111% = $73,200 Base $55,000 x 100% = $55,000 2016 $10,540 x 106% = $11,172 2017 $7,660 x 111% = $8,503 $74,675 31/12/2018 $76,235 / 116% = $65,720 Base $55,000 x 100% = $55,000 2016 $10,540 x 106% = $11,172 2017 $180 x 111% = $200 $66,372 31/12/2019 $104,619 / 124% = $84,370 Base $55,000 x 100% = $55,000 2016 $10,540 x 106% = $11,172 2017 $180 x 111% = $200 2019 $18,650 x 124% $23,126 $89,498 Year 2016 2017 2018 2019 Ending Inventory $66,172 $74,675 $66,372 $89,498
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