Johnson Corp. uses dollar-value LIFO method of computing its inventory cost. Dat

Question

Johnson Corp. uses dollar-value LIFO method of computing its inventory cost. Data for the past three years is as follows:

     Year ended                           Inventory at                   Price
     December 31                    End-of-year Prices             Index
          2013                                  $250,000                     1.00
          2014                                      480,000                     1.10
          2015                                      560,000                     1.25

What is the 2015 inventory balance using dollar-value LIFO?

Select one:

A. $448,000

B. $469,545

C. $560,000

D. $700,000

Explanation / Answer

2015 inventory balance using dollar-value LIFO = B. $469,545 ,

480000/1.1*1

=436364

560000/1.25*1

=448000

inventory balance using dollar-value LIFO

2013 = $250000 * 1 = $250000

2014 =   $250000 * 1 =$250000

= $186364 *1.1 = 205000

2015 =   $250000 * 1 =$250000

= $186364 *1.1 = $205000

= $11636 * 1.25 = $14545

= $469545

Year ended Inventory at end of year price index Inventory at base year prior year change 2013 250000 1 250000 0 2014 480000 1.1

480000/1.1*1

=436364

186364 2015 560000 1.25

560000/1.25*1

=448000

11636

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