Question

Gross Corporation adopted the dollar-value LIFO method of inventory valuation on December 31, 2013. Its inventory at that date was $550,000 and the relevant price index was 100. Information regarding inventory for subsequent years is as follows: Inventory at Current Date Current Prices Price Index December 31, 2014 $642,000 107 December 31, 2015 725,000 125 December 31, 2016 812,500 130 What is the cost of the ending inventory at December 31, 2014 under dollar-value LIFO

Answer 1

Answer: $603,500

Explanation:

Ending inventory in 2014;

= Ending inventory balance 2013 + (($\frac{Inventory current price 2014}{Price index 2014}$ * 100) - ending inventory 2013)) * Price index 2014/100

= 550,000 + (($\frac{642,000}{107}* 100$) - 550,000)) * 107/100

= $603,500