Question

Dynamite INC sells munitions and uses dollar value LIFO with one inventory pool the current use of dollar value LIFO began on 1-1-2011, when the begining inventory was 350,000, and the opening price level was 1.00 for that date. the cumulative price levels and current replacement costs of the ending inventory amounts for the years 2011 through 2014 are listed below.

year 12-31-2011,price level 1.07, current replacemet cot of ending inventory $ 395,900

year 12-31-2012, price level 1.12, current replacement cost of ending inventory $ 397,600

year 12-31-2013, price level 1.23, current replacement cost of ending inventory $ 492,000

year 12-31-2014, price level 1.34, current replacement cost of ending inventory $ 576,200

compute the dollar value LIFO ending inventory for DI for the years 2011-2014.

Answer 1

Solution:

Computation of inventory at base year prices and change from prior year -DI
Year	Inventory at end of year prices	Price index (Percentage)	Inventory at base year prices	Change from Prior Years
2010	$350,000.00	100	$350,000	$0
2011	$395,900.00	107	$370,000	$20,000
2012	$397,600.00	112	$355,000	-$15,000
2013	$492,000.00	123	$400,000	$45,000
2014	$576,200.00	134	$430,000	$30,000

Computation of dollar value inventory - LIFO
Particulars	Amount
December 31, 2011:
$350,000*$1	$69,400
$20,000*1.07	$21,400
Inventory at Dec 31, 2011	$90,800
December 31, 2012:
$350,000*$1	$69,400
$5,000*1.07	$5,350
Inventory at Dec 31, 2012	$74,750
December 31, 2013:
$350,000*$1	$69,400
$5,000*1.07	$5,350
$45,000*1.23	$55,350
Inventory at Dec 31, 2013	$130,100
December 31, 2014:
$350,000*$1	$69,400
$5,000*1.07	$5,350
$45,000*1.23	$55,350
$30000*1.34	$40,200
Inventory at Dec 31, 2014	$170,300