Question

RF Company had January 1 inventory of $300,000 when it adopted dollar-value LIFO. During the year, purchases were $1,800,000 and sales were $3,000,000. December 31 inventory at year-end prices was $430,080, and the price index was 1.12. What is RF Company’s ending inventory?

Answer 1

Answer:

$394,080

Explanation:

Given

January inventory =

$300,000

December inventory = $ 430,080

Price index = 1.12

We use the following method to obtain the RF company's unending inventory

December 31st divided by the price index.

= $430,080÷1.12

= $384,000

we now minus the sales of the whole year from the inventory.

= $384,000 - $300,000

=$84,000

The RF Company's ending inventory is

= $300,000+$84,000×1.12

= $300,000+$94,080

=$394,080

$394,080 as RF Company's ending inventory

Answer 2

Answer:

$394, 080

Explanation:

To calculate the ending inventory of RF Company, we have to first calculate the inventory at year-end (December 31st) divided by the price index.

$= \frac{430080}{1.12} = 384000$

Second, we subtract the sales of the year from the inventory at year-end.

$= 384000 - 300000 = 84000$

To calculate RF Company's ending inventory, we have;

$300000 + 84000 * 1.12 = 394080$

Therefore, RF Company's ending inventory is $394,080