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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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  1. 26 November, 18:24
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    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
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