Question

Sheridan Company began using dollar-value LIFO for costing its inventory two years ago. The ending inventory for the past two years in end-of-year dollars was $292000 and $459000 and the year-end price indices were 1.0 and 1.1, respectively. Assuming the current inventory at end of year prices equals $647000 and the index for the current year is 1.15, what is the ending inventory using dollar-value LIFO? (Round intermediate calculations and final answer to 0 decimal places, e.g. 10,000.)

$600686.

$596936.

$563186.

$589886.

Please show work

Answer 1

	Correct option is: B. $596,936
	Workings:
Year	Ending Inventory	Price Index	Base year prices	Increase / (Decrease)
	(i)	(ii)	(iii) = [(i) / (ii)]	(iv)
1	$                                                                         2,92,000	1	$                         2,92,000	$                   -
2	$                                                                         4,59,000	1.1	$                         4,17,273	$      1,25,273
3	$                                                                         6,47,000	1.15	$                         5,62,609	$      1,45,336
			Ending Inventory under LIFO
1	($292000*1)	=	$                         2,92,000
2	($292000*1) + ($125273*1.10)	=	$                         4,29,800
3	($292000*1) + ($125273*1.10) + ($145336*1.15)	=	$                         5,96,936