Question

Carla Vista Company manufactures one product. On December 31, 2019, Carla Vista adopted the dollar-value LIFO inventory method. The inventory on that date using the dollar-value LIFO inventory method was $960,000. Inventory data are as follows:

Year		Inventory at year-end prices			Price index (base year 2019)
2020		$1,285,200			1.05
2021		1,840,000			1.15
2022		1,930,000			1.25

Compute the inventory at December 31, 2020, 2021, and 2022, using the dollar-value LIFO method for each year.

Inventory at December 31, 2020

Inventory at December 31, 2021

Inventory at December 31, 2022

Answer 1

Date	Inventory at Year End Prices	Price Index (Base Year 2019)	Inventory at Base year Prices	Change From Previous Year
December 31, 2019	$960,000	1	$960,000	0
December 31, 2020	$1,285,200	1.05	$1,224,000	$264,000
December 31, 2021	$1,840,000	1.15	$1,600,000	$376,000
December 31, 2022	$1,930,000	1.25	$1,544,000	($56,000)

Now we can compute the dollar value inventory:

December 31, 2019
$960,000 @ 1.0	$960,000
December 31, 2020
$960,000 @ 1.0	$960,000
$264,000 @ 1.05	$277,200
December 31, 2020	$1,237,200
December 31, 2021
$960,000 @ 1.0	$960,000
$264,000 @ 1.05	$277,200
$376,000 @ 1.15	$432,400
December 31, 2021	$1,669,600
December 31, 2022
$960,000 @ 1.0	$960,000
$264,000 @ 1.05	$277,200
$320,000 @ 1.15	$368,000
December 31, 2022	$1,605,200

The Index price(1.15) of 2021 has been used because the ending inventory at base-year-prices ($1,544,000) is less than the beginning inventory at base-year-prices ($1,600,000).