Exercise 8-20 Date Price Index Ending Inventory at Base Prices Ending Inventory

Question

Exercise 8-20

Date

Price
Index

Ending Inventory
at Base Prices

Ending Inventory
at Dollar-Value LIFO

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Exercise 8-20

Blue Company has used the dollar-value LIFO method for inventory cost determination for many years. The following data were extracted from Blue’s records.

Date

Price
Index

Ending Inventory
at Base Prices

Ending Inventory
at Dollar-Value LIFO

December 31, 2017 105 $92,340 $97,300 December 31, 2018 ? 97,340 103,050
Calculate the index used for 2018 that yielded the above results.
Index used for 2018

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Explanation / Answer

Solution: 115

Working:

97,340 - 92,340 = $5,000, increase at base prices

103,050 - 97,300 = $5,750, increase in dollar-value LIFO value

$5,000 * Index = $5,750

Index = $5,750 ÷ $5,000

Index = 115

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