E9. Dollar-Value LIFO, No Liquidation. Joe the Grocer Markets, Inc. (JTGM) adopt

Question

E9. Dollar-Value LIFO, No Liquidation. Joe the Grocer Markets, Inc. (JTGM) adopted the dollar-value LIFO inventory method using 2018 as the base year. JTGM uses FIFO for its internal books. Information related to its inventory is presented in the following table: Ending Inventory at End-of-Year Prices per Internal Books Year 2018 2019 2020 $ 870,000 980,000 1,050,000 Cumulative Price Index 100 102 103 Required » a. b. c. Compute JTGM's ending inventory under the dollar-value LIFO method for the years 2018 through 2020 Prepare the journal entries for 2019 and 2020 to adjust inventory to the dollar-value LIFO basis. Determine the ending balance of the LIFO reserve for 2019 and 2020

Explanation / Answer

a.

ENDING INVENTORY UNDER LIFO

b.

c.

LIFO Reserve A/C

Year Year end Prices Under FIFO Cumulative Price Index Index At Base year Cost Increase in inventory (at base year dollar) Increase in inventory At converted cost 2018 $                                   870,000.00 100 1 $          870,000.00 - - 2019 $                                   980,000.00 102 1.02 $          960,784.31 $                  90,784.31 $                  92,600.00 2020 $                               1,050,000.00 103 1.03 $       1,019,417.48 $                  58,633.16 $                  60,392.16

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