Question

Bonita Company cans a variety of vegetable-type soups. Recently, the company decided to value its inventories using dollar-value LIFO pools. The clerk who accounts for inventories does not understand how to value the inventory pools using this new method, so, as a private consultant, you have been asked to teach him how this new method works.

He has provided you with the following information about purchases made over a 6-year period.

Date		Ending Inventory (End-of-Year Prices)				Price Index
Dec. 31, 2013			$75,300			100
Dec. 31, 2014			119,880			111
Dec. 31, 2015			118,110			127
Dec. 31, 2016			140,760			138
Dec. 31, 2017			160,580			148
Dec. 31, 2018			188,958			154

You have already explained to him how this inventory method is maintained, but he would feel better about it if you were to leave him detailed instructions explaining how these calculations are done and why he needs to put all inventories at a base-year value.

Compute the ending inventory for Richardson Company for 2013 through 2018 using dollar-value LIFO.

i need help with year 2017 and 2018

Answer 1

Calculate ending inventory (Dollar value LIFO )
1) Calculate value of ending inventory of current year at base year prices :
Value of current year ending inventory at current prices / price index of current year
2013	75300/1.00		$                                       75,300.00
2014	119880/1.11		$                                     108,000.00
2015	118110/1.27		$                                       93,000.00
2016	140760/1.38		$                                     102,000.00
2017	160580/1.48		$                                     108,500.00
2018	188958/1.54		$                                     122,700.00
2) Calculate Quantity increase / decrease in real dollar times :
2013		$                   -
2014		$   32,700.00
2015		$ (15,000.00)
2016		$      9,000.00
2017		$      6,500.00
2018		$   14,200.00
3) Convert real dollar quantity increase/decrease at current year prices :
Real dollar quantity increase in inventory *current year price index
[a]	[b]	[c]	[c]*[d]
2013
2014	$       32,700.00	1.11	$                                       36,297.00
2015	$     (15,000.00)	1.11	$                                     (16,650.00)
2016	$         9,000.00	1.38	$                                       12,420.00
2017	$         6,500.00	1.48	$                                         9,620.00
2018	$       14,200.00	1.54	$                                       21,868.00
In 2015 price index of 2014 has been used as no layer is formed because ending invenntory of 2015 at base price is less than beginning inventory at base price.
4) Calculate the ending inventory :
Year ended	Ending inventory	Price index	Ending inventory at base year	Quantity increase in real dollars from prior years	Real dollar increase at current prices	Inventory under dollar value LIFO method
			[1]	[2]	[3]	[4]
2013	75300	100	75300	$                                                                                              -	0	75300
2014	119880	111	108000	$                                                                               32,700.00	36297	111597
2015	118110	127	93000	$                                                                             (15,000.00)	-16650	94947
2016	140760	138	102000	$                                                                                 9,000.00	12420	107367
2017	160580	148	108500	$                                                                                 6,500.00	9620	116987
2018	188958	154	122700	$                                                                               14,200.00	21868	138855