Kingston Company uses the dollar-value LIFO method of computing inventory. An ex

Question

Kingston Company uses the dollar-value LIFO method of computing inventory. An external price index is used to convert ending inventory to base year. The company began operations on January 1, 2018, with an inventory of $210,000. Year-end inventories at year-end costs and cost indexes for its one inventory pool were as follows:

Required:
Calculate inventory amounts at the end of each year. (Round intermediate calculations and final answers to the nearest whole dollars.)
  

Year Ended Ending Inventory Cost Index December 31 at Year-End Costs (Relative to Base Year) 2018 $ 308,000 1.10 2019 396,000 1.20 2020 374,400 1.17 2021 367,250 1.13

Explanation / Answer

Calculate inventory amounts at the end of each year.

Year Ending inventory at year end cost Ending inventory at base year price Ending inventory under dollar value LIFO method 2018 308000 280000 (210000*1+70000*1.1) 287000 2019 396000 330000 (210000*1+70000*1.1+50000*1.2) 347000 2020 374400 320000 (210000*1+70000*1.1+40000*1.2) 335000 2021 367250 325000 (210000*1+70000*1.1+45000*1.2) 341000

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