Canova Corporation adopted the dollar-value LIFO retail method on January 1, 201

Question

Canova Corporation adopted the dollar-value LIFO retail method on January 1, 2016. On that date, the cost of the inventory on hand was $32,000 and its retail value was $40,000. Information for 2016 and 2017 is as follows:

What is the cost-to-retail percentage for the inventory on hand at 1/1/16?

Calculate the inventory value at the end of 2016 and 2017 using the dollar-value LIFO retail method.

Canova Corporation adopted the dollar-value LIFO retail method on January 1, 2016. On that date, the cost of the inventory on hand was $32,000 and its retail value was $40,000. Information for 2016 and 2017 is as follows:

Explanation / Answer

1. the cost-to-retail percentage for the inventory on hand at 1/1/16 = 32000 / 40000 = 80%

2. the inventory value at the end of 2016 using the dollar-value LIFO retail method = $52000 * 84% = $43680

the inventory value at the end of 2017 using the dollar-value LIFO retail method = $58500 * 85% = $49725

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