Question

Gross Corporation adopted the dollar-value LIFO method of inventory valuation on December 31, 2013. Its inventory at that date was $550,000 and the relevant price index was 100. Information regarding inventory for subsequent years is as follows: Inventory at Current Date Current Prices Price Index December 31, 2014 $642,000 107 December 31, 2015 725,000 125 December 31, 2016 812,500 130 What is the cost of the ending inventory at December 31, 2014 under dollar-value LIFO

Answer 1

Answer: $603,500

Step-by-step explanation:

Ending inventory in 2014;

= Ending inventory balance 2013 + ((
`(Inventory current price 2014)/(Price index 2014)` * 100) - ending inventory 2013)) * Price index 2014/100

= 550,000 + ((
`(642,000)/(107)* 100`) - 550,000)) * 107/100

= $603,500