Brief Exercise 8-9 Year Ended December 31 Inventory at Current-Year Cost Price I

Question

Brief Exercise 8-9

Year Ended
December 31

Inventory at
Current-Year Cost

Price
Index

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Brief Exercise 8-9

Carla, Inc. uses the dollar-value LIFO method of computing its inventory. Data for the past 3 years follow.

Year Ended
December 31

Inventory at
Current-Year Cost

Price
Index

2016 $18,000 100 2017 20,009 107 2018 23,296 112
Compute the value of the 2017 and 2018 inventories using the dollar-value LIFO method.
2017 2018 Inventory under LIFO $

$

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Explanation / Answer

Date Inventory at Price Inventory Change Current-Year Cost index at base from (%) year price prior year (a) (b) (a)/(b) 2016 18000 100 18000 0 2017 20009 107 18700 700 2018 23296 112 20800 2100 2017 Value of inventory Base year 2016 (18000*1) 18000 Increase 2017 (700*1.07) 749 18749 2018 Value of inventory Base year 2016 (18000*1) 18000 Increase 2017 (700*1.07) 749 Increase 2018 (2100*1.12) 2352 21101

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