Question

USE THE FOLLOWING INFORMATION TO ANSWER THE NEXT (2) QUESTIONS: Sparky Company adopted Dollar Value LIFO (DVL) on January 1, 20x1 for its one inventory pool. The inventory's value on this date was $360,000. The ending inventory valued at year-end costs for 20x1, 20x2 and 20x3 are reported below along with the price index for each year: Year Ending Inventory at Year-end Costs Specific Price Index Dec 31, 20X1 $407,570 106 Dec 31, 20X2 $439,450 110 Dec 31, 20X3 $427,800 115 a. Determine the Ending Inventory value to be reported on Sparky's balance sheet dated December 31, 20x3 using DVL: $[Blank_1]

Answer 1

Answer:

$405,101.40

Explanation:

date                       ending inventory                  cost index

                             at current year cost

Jan. 1, 20x1                $360,000                               100

Dec. 31, 20x1             $407,570                                106

Dec. 31, 20x2            $439,450                                110

Dec. 31, 20x3            $427,800                                115

Inventory Jan. 1, 20x1:

$360,000 x 100/100 = $360,000

Inventory Dec. 31, 20x1:

ending inventory at base year cost = $407,570 / (106/100) = $384,500

$360,000 x 100/100 = $360,000

$24,500 x 106/100 = $28,420

total $388,420

Inventory Dec. 31, 20x2:

ending inventory at base year cost = $439,450 / (106/100) = $414,575.47

$360,000 x 100/100 = $360,000

$24,500 x 106/100 = $28,420

$26,155.47 x 110/100 = $28,771

total $417,191

Inventory Dec. 31, 20x3:

ending inventory at base year cost = $427,800 / (106/100) = $403,584.91

$360,000 x 100/100 = $360,000

$24,500 x 106/100 = $28,420

$15,164.91 x 110/100 = $16,681.40

total $405,101.40