On January 1, Greenview Company adopted the dollar-value LIFO method. The inventory cost on January 1 was $112,000. On December 31, ending inventory had a cost of $136,400. The cost index for the year was 1.10. For what amount would ending inventory be reported?

125,200

Explanation:

Adjust inventory to base year prices:

= Cost of ending inventory : cost index for the year

= $136400 : 1.1

= $124,000

Current year LIFO layer:

= Adjust inventory to base year prices - Cost of beginning inventory

= $124,000 - $112,000

= $12,000

Inventory to be shown:

= Add the new LIFO layer at end of period prices to prior year LIFO inventory

= (112,000 * 1) + (12,000 * 1.1)

= 112,000 + 13,200

= 125,200