Question

Vaughn, Inc. uses the dollar-value LIFO method of computing its inventory. Data for the past 3 years follow. Year Ended December 31 Inventory at Current-Year Cost Price Index 2019 $20,000 100 2020 22,464 108 2021 26,334 114 Compute the value of the 2020 and 2021 inventories using the dollar-value LIFO method.

Answer 1

Year Ended December 31 Inventory at Current-Year Cost Price Index

2019 $20,000 100

2020 $22,464 108

2021 $26,334 114

Inventory at base year prices:

2020 = $20,800

2021 = $23,100

Change from prior yer:

2020 = $800

2021 = $2,300

Dollar value:

2020 = $20,000 + ($800 x 1.08) = $20,864

2021 = $20,864 + (2,300 x 1.14) = $23,486