Question

Lewis Company adopted the dollar-value LIFO method of inventory valuation on 12/31/18. Its inventory at that date was $320,000 and the relevant price index was 100.

What will Lewis report as inventory at the end of 2019, 2020, 2021, and 2022 using dollar-value LIFO?

Date	Inv at current price	current price index	inv at base level price
12/31/19	338,000	104	325,000
12/31/20	371,000	106	350,000
12/31/21	372,600	108	345,000
12/31/22	381,500	109	350,000

Answer 1

Under LIFO ,units acquired last are sold first so ending inventory is left from initial inventory balance.

Date	Conversion of Ending inventory to base year prices	Ending inventory at Current price
	Inventory at end of year prices	Price Index	Inventory at base year prices	Inventory at base year prices	Price Index	Cost of ending inventory	Total cost of ending inventory at year end
12/31/18	320000	100/100=1	320000/1=320000	320000	1	320000	320000
12/31/19	338000	104/100=1.04	338000/1.04= 325000	320000 (from 2018)	1	320000
				325000-320000=5000	1.04	5000*1.04=5200	325200
12/31/20	371000	106/100=1.06	371000/1.06=350000	320000   (from 2018)	1	320000
				5000       (from 2019)	1.04	5200
				350000-320000-5000= 25000	1.06	26500	351700
12/31/21	372600	108/100=1.08	372600/1.08= 345000	320000   (from 2018)	1	320000
				5000       (from 2019)	1.04	5200
				345000-320000-5000= 20000 (from 2020)	1.06	21200	346400
12/31/22	381500	109/100=1.09	381500/1.09= 350000	320000   (from 2018)	1	320000
				5000       (from 2019)	1.04	5200
				20000 (from 2020)	1.06	21200
				5000    (from 2022)	1.09	5450	351850