3. REQUIRED: Compute inventory amounts at the end of each year. On January 1, 20

Question

3. REQUIRED: Compute inventory amounts at the end of each year. On January 1, 2016, the Rayfurd Furniture Company adopted the dollar-value LIFO method of computing inventory. An internal cost index is used to convert ending inventory to base year. Inventory on January 1 was $200,000. Year-end inventories at year-end costs and cost indexes for its one inventory pool were as follows: 4. REQUIRED: Compute the dollar-value LIFO inventory valuation for the December 31. 2016, inventory. Appleton Inc. adopted dollar-value LIFO on January 1, 2016. when the inventory value was $1,200000 The December 31, 2016, ending inventory at year-end costs was $1430,000 and the cost index for the year is 1.1.

Explanation / Answer

201`6 Inventory at Base Year Prices = 259,200 / 1.08 = 240,000

Increase in Inventory = 240,000 - 200,000 = $40,000

Value of quantity increase at year end prices = 40,000 x 1,08 = 43,200

Dollar value inventory on 31 Dec. 2016 = 200,000 + 43,200 = $243,200

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