Answer:
$1,257,750
Explanation:
Year ended inventory at price end-of-year prices index
December 31
2016 $650,000 1.00
2017 $1,260,000 1.05
2018 $1,350,250 1.10
2016 $650,000 / 1 = $650,000
2017 $1,260,000 / 1.05 = $1,200,000
$1,200,000 - $650,000 = $550,000 x 1.05 = $577,500
<u>+ $650,000 </u>
$1,227,500
2018 $1,350,250 / 1.05 = $1,227,500
$1,227,500 - $650,000 - $550,000 = $27,500 x 1.1 = $30,250
<u>+ $1,227,500</u>
$1,257,750
