Question

The following data are provided regarding an entities ending inventory

year	current cost of ending inventory	cumulative price level
15	250,000	100
16	342,000	120
17	383,500	130
18	375,000	125
19	406,000	140

Calculate ending inventory for each year, 2015 through 2019, inclusive, using the dollar value LIFO method as well as any reported LIFO reserve.

Answer 1

Solution :

Computation of inventory at base year prices and change from prior year
Year	Inventory at end of year prices	Price index	Inventory at base year prices	Change from Prior Years
2015	$250,000.00	100	$250,000	$0
2016	$342,000.00	120	$285,000	$35,000
2017	$383,500.00	130	$295,000	$10,000
2018	$375,000.00	125	$300,000	$5,000
2019	$406,000.00	140	$290,000	-$10,000

Computation of dollar value inventory - LIFO
Particulars	Amount
December 31, 2015:
$250,000*1	$250,000
December 31, 2016:
$250,000*1	$250,000
$35,000*1.20	$42,000
Inventory at Dec 31, 2016	$292,000
December 31, 2017:
$250,000*1	$250,000
$35,000*1.20	$42,000
$10,000*1.30	$13,000
Inventory at Dec 31, 2017	$305,000
December 31, 2018:
$250,000*1	$250,000
$35,000*1.20	$42,000
$10,000*1.30	$13,000
$5,000*1.25	$6,250
Inventory at Dec 31, 2018	$311,250
December 31, 2019:
$250,000*1	$250,000
$35,000*1.20	$42,000
$5,000*1.30	$6,500
Inventory at Dec 31, 2019	$298,500

Particulars	2019	2018	2017	2016	2015
Inventory at current cost	$406,000.00	$375,000.00	$383,500.00	$342,000.00	$250,000.00
Less: LIFO Reserve	$107,500.00	$63,750.00	$78,500.00	$50,000.00	$0.00
Inventory at LIFO	$298,500.00	$311,250.00	$305,000.00	$292,000.00	$250,000.00