Sandhill Company cans a variety of vegetable-type soups. Recently, the company d
ID: 2591181 • Letter: S
Question
Sandhill 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
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.
Date
Ending Inventory
(End-of-Year Prices)
Price Index
Dec. 31, 2013 $73,600 100 Dec. 31, 2014 128,856 118 Dec. 31, 2015 123,950 134 Dec. 31, 2016 147,022 146 Dec. 31, 2017 168,147 157 Dec. 31, 2018 199,584 162Explanation / Answer
Computing ending Inventory Unsing Dollar value LIFO Date Ending Inventory (End prices) Price Index as % Ending Inventory at base year prices base layers Base year Price Index as % layer value LiFo Ending Inventory LIFO December 31 ,2013 $ 73,600.00 100 $ 73,600.00 $ 73,600.00 2013 100 $ 73,600.00 $ 73,600.00 December 31 ,2014 $ 1,28,856.00 118 $ 1,09,200.00 $ 73,600.00 2013 100 $ 73,600.00 $ 35,600.00 2014 118 $ 42,008.00 $ 1,15,608.00 December 31 ,2015 $ 1,23,950.00 134 $ 92,500.00 $ 73,600.00 2013 100 $ 73,600.00 $ 18,900.00 2014 118 $ 22,302.00 $ 95,902.00 December 31 ,2016 $ 1,47,022.00 146 $ 1,00,700.00 $ 73,600.00 2013 100 $ 73,600.00 $ 18,900.00 2014 118 $ 22,302.00 $ 8,200.00 2016 146 $ 11,972.00 $ 1,07,874.00 December 31 ,2017 $ 1,68,147.00 157 $ 1,07,100.00 $ 73,600.00 2013 100 $ 73,600.00 $ 18,900.00 2014 118 $ 22,302.00 $ 8,200.00 2016 146 $ 11,972.00 $ 6,400.00 2017 157 $ 10,048.00 $ 1,17,922.00 December 31 ,2018 $ 1,99,584.00 162 $ 1,23,200.00 $ 73,600.00 2013 100 $ 73,600.00 $ 18,900.00 2014 118 $ 22,302.00 $ 8,200.00 2016 146 $ 11,972.00 $ 6,400.00 2017 157 $ 10,048.00 $ 16,100.00 2018 162 $ 26,082.00 $ 1,44,004.00
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