Question

In January, Stitch, Inc. adopted the dollar-value LIFO method of inventory valuation. At adoption, inventory was valued at $50,000. During the year, inventory increased $30,000 using base-year prices, and prices increased 10%. The designated market value of Stitch's inventory exceeded its cost at year end. What amount of inventory should Stitch report in its year-end balance sheet

Answer 1

Answer:

$83,000

Explanation:

Calculation of the amount of inventory that Stitch should report in its year-end balance sheet

First step is to calculate for the 10% price increase

Increase price = ( $30,000 x 10% ) =$3,000

Second step is to add up the price increase to the amount of increase in inventory

$30,000 + $3,000 =$33,000

Hence, $33,000 will now be the increased in price inventory

Last step is to calculate for the amount of inventory that Stitch should report in its year-end balance sheet

Using this formula

Inventory to be reported = Valued of the Adoption inventory + Increase price Inventory

Where,

Adoption inventory value= $50,000

Increase price Inventory=$33,000

Let plug in the formula

Inventory to be reported = $50,000 + $33,000

Inventory to be reported =$83,000

Therefore the amount of inventory that Stitch should report in its year-end balance sheet will be $83,000