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Kingbird Corporation adopted the dollar-value LIFO retail inventory method on January 1, 2016. At that time...

Kingbird Corporation adopted the dollar-value LIFO retail inventory method on January 1, 2016. At that time the inventory had a cost of $57,000 and a retail price of $100,000. The following information is available. Year-End Inventory at Retail Current Year Cost—Retail % Year End Price Index 2016 $133,560 56% 106 2017 146,520 59% 111 2018 124,120 60% 116 2019 168,750 57% 125 The price index at January 1, 2016, is 100. Compute the ending inventory at December 31 of the years 2016–2019.

Expert Solution

Ending Inventory for 2016

12/31/16 Inventory at year end prices = $133560

Relevant Price Index at year end (base date 1 January, 2016) = 106

Using dollar Value LIFO, Ending Inventory for 2016 is = $57,000 + ($69,000* x 1.06) = $1,30,140

*($133560 / 1.06) - $57,000 = $69,000

Ending Inventory for 2017

12/31/17 Inventory at year end prices = $146,520

Relevant Price Index at year end (base date 1 January, 2017) = 111

Using dollar Value LIFO, Ending Inventory for 2017 is = $57,000 + ($75,000* x 1.11) = $1,40,250

*($146520 / 1.11) - $57,000 = $75,000

Ending Inventory for 2018

12/31/18 Inventory at year end prices = $124120

Relevant Price Index at year end (base date 1 January, 2018) = 116

Using dollar Value LIFO, Ending Inventory for 2018 is = $57,000 + ($50,000* x 1.16) = $1,15,000

*($124120 / 1.16) - $57,000 = $50,000

Ending Inventory for 2019

12/31/19 Inventory at year end prices = $1,68,750

Relevant Price Index at year end (base date 1 January, 2019) = 125

Using dollar Value LIFO, Ending Inventory for 2019 is = $57,000 + ($78,000* x 1.25) = $1,54,500

*($168750 / 1.25) - $57,000 = $78,000

ekkarill92 answered 2 years ago

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