Page 14 of 20 Problem #4: Dollar-value uFO (22 points) In its balance sheet at D
ID: 2394746 • Letter: P
Question
Page 14 of 20 Problem #4: Dollar-value uFO (22 points) In its balance sheet at December 31, 2018, Gower Pharmaceuticals Corp. reported i or $520,000. nventory at a FIFO cost valuation as of January 1, 2019. The company to determine the current cost of its ending Corp. applied to the IRS for permission to adopt the dollar-value LIFO method of received the approval of the IRS based on its plan inventory inventory and an external price index in its dollar- to use FIFO value LIFO caículations. was obtained relative to the company's inventory for 2019 and 2020: The following information Ending Inventory Current Price Index Date December 31, 2019 December 31, 2020 December 31, 2021 Year FIFO Prices $567,100 $576,800 $602,600 107 112 115 Compiete the following table to compute the required inventory values under the dollar-value LIFO method. (12 points) a. Inventory at Price Inventory at Increase LIFO Layers at Price LIFO Layers at Dollar-Value Cost Index Base Yr Cost (Decrease) Base Yr Costs Index Current Costs 2019 BASE YR $520,000 1.00 $520,000 $520,000 1)$520,000 1.00 BASE P $520,000 2019 30,090 530,2oo dou C oExplanation / Answer
Solution:-
A) Inventory and LIFO Reserve using dollar value LIFO method
Particulars
Amount
Inventory in the balance sheet as on 2021
5,25,350
LIFO Reserve in the footnotes- WN 1
77,250
Working Note 1- (Note-LIFO Reserve is the difference between FIFO valuation and LIFO valuation of Inventory)
Year
FIFO
LIFO
Difference (Reserve)
2019
5,67,100
5,30,200
36,900
2020
5,76,800
5,15,000
61,800
2021
6,02,600
5,25,350
77,250
B) Cost of Goods Sold
Particulars
Amount
Beginning Inventory
5,15,000
Net Purchase include Freight during year
33,80,000
Ending Inventory
5,25,350
Cost of goods sold
33,69,650
A) Inventory and LIFO Reserve using dollar value LIFO method
Particulars
Amount
Inventory in the balance sheet as on 2021
5,25,350
LIFO Reserve in the footnotes- WN 1
77,250
Working Note 1- (Note-LIFO Reserve is the difference between FIFO valuation and LIFO valuation of Inventory)
Year
FIFO
LIFO
Difference (Reserve)
2019
5,67,100
5,30,200
36,900
2020
5,76,800
5,15,000
61,800
2021
6,02,600
5,25,350
77,250
B) Cost of Goods Sold
Particulars
Amount
Beginning Inventory
5,15,000
Net Purchase include Freight during year
33,80,000
Ending Inventory
5,25,350
Cost of goods sold
33,69,650
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