Question

Presented below is information related to Marigold Company. Date Ending Inventory (End-of-Year Prices) Price Index December 31, 2017 $ 77,100 100 December 31, 2018 140,238 126 December 31, 2019 138,528 144 December 31, 2020 155,844 156 December 31, 2021 185,808 168 December 31, 2022 223,590 174 Compute the ending inventory for Marigold Company for 2017 through 2022 using the dollar-value LIFO method.

Answer 1

Answer:

2017  $     77,100

2018  $   120.192

2019  $    101.166‬

2020 $ 106,938‬

2021  $  124,914‬

2020 $ 156,060‬

Explanation:

We have to compare eahc year against base year and then, add layer or subtract from the inventory when increases or decreases occur respectively.

2018 at year-base

140,238 / 1.26= 111,300

increase on inventory: 111,300 - 77,100 = 34,200

times price index at year 2018: 34,200 x 1.26 = 43,092

ending inventory on balance sheet:

2019 at year-base 138,528 / 1.44 = 96,200

decrease in inventory: 96200 - 111300 = -15,100

we subtract from the newest layer as it is LIFO method:

120.192 - 15,100 x 1.26 =  101.166‬

2020 at year base: 155,844 / 1.56 = 99,900

beginning inventory:                          96,200

increase in inventory                            3,700      

101,166 + 3,700 x 1.56 =   106,938‬

2021 at year base: 185,808 / 1.68 = 110,600

beginning inventory:                         99,900

increase in inventory                         10,700

106,938 + 10,700 x 1.68 = 124,914‬

2022 at year base: 223,590 / 1.74 = 128,500

beginning inventory                            110,600

increase in inventory                            17,900

124,914 + 17,900 x 1.74 =  156,060‬