On January 1, 2021, the Haskins Company adopted the dollar-value LIFO method for its one inventory pool. The pool's value on this date was $720,000. The 2021 and 2022 ending inventory valued at year-end costs were $754,000 and $848,000, respectively. The appropriate cost indexes are 1.04 for 2021 and 1.06 for 2022. Calculate the inventory value at the end of 2021 and 2022 using the dollar value LIFO methods.

Question

Jerimiah Hunt

Business

26 November, 17:55

On January 1, 2021, the Haskins Company adopted the dollar-value LIFO method for its one inventory pool. The pool's value on this date was $720,000. The 2021 and 2022 ending inventory valued at year-end costs were $754,000 and $848,000, respectively. The appropriate cost indexes are 1.04 for 2021 and 1.06 for 2022. Calculate the inventory value at the end of 2021 and 2022 using the dollar value LIFO methods.

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Pablo Kim · Answer 1

2021: 784,160‬ dollars

2022: 864,308 dsollars

Explanation:

At year-end we must adjust by the difference in the cost indexes

Assumuning the beginning of 2021 is 1.00 and ending of 2021 1.04 then, inventory should be:

2021 ending inventory:

754,000 * 1.04 = 784,160‬

Then, at 2022 we adjust for the quotient between 2021 and 2022 indexes:

848,00 x 1.06/1.04 = 864,307.6923 = 864,308