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, 2016, with an inventory of $165,000. Year-end inventories at year-end costs and cost indexes for its one inventory pool were as follows: Year Ended Ending Cost Index Inventory at Year-End (Relative to Base Year) 1.06 1.18 1.15 1.11 cember 31 2016 2017 2018 2019 Costs 243,800 324,500 304,750 299,700 Required: Calculate inventory amounts at the end of each year. Answer is not complete. Ending Date 12/31/16 $233,900 12/31/17 $287,000 12/31/18 12/31/19 Inventory

Explanation / Answer

Therefore,

Calculation of Inventory End Prices using Dollar value LIFO method Ending Inventory (End of Year Prices) (a) Price Index (b) Inventory at base year prices [(a)/(b)] Change from prior years [(c)= (b)present year-(b) previous year] real dollar quantity increase in inventory at year-end-prices: [(d)=(c)x(b)] Dollar value LIFO Inventory at the end of Year [(e)present year= (d)+ (e)previous year] December 31, 2015 $1,65,000 1 $1,65,000 $0 $0 $1,65,000 December 31, 2016 $2,43,800 1.06 $2,30,000 $65,000 $68,900 $2,33,900 December 31, 2017 $3,24,500 1.18 $2,75,000 $45,000 $53,100 $2,87,000 December 31, 2018* $3,04,750 1.15 $2,65,000 -$10,000 -$11,500 (-ve layer) (at base year 2015 price for -ve layer) $3,04,750 1.15 $2,65,000 $1,00,000 $1,18,000 $2,83,000 December 31, 2019 $2,99,700 1.11 $2,70,000 $5,000 $5,550 $2,88,550 *The price index of 2017 and base year price of 2015 has been used because no layer has been formed during the year 2018. The ending inventory at base-year-prices ($ 265,000) is less than the beginning inventory at base-year-prices ($ 275,000).

Related Questions

Navigate

• Browse (All)
• Browse K
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.