Question

Knowledge Check 01 On January 1, Greenview Company adopted the dollar-value LIFO method. The inventory cost on January 1 was $112,000. On December 31, ending inventory had a cost of $136,400. The cost index for the year was 1.10. For what amount would ending inventory be reported

Answer 1

Inventory to be reported is 125200

Step-by-step explanation:

Adjust inventory to base year prices

$136400/1.1= 124000

CURRENT YEAR LIFO LAYER

$124000-$112000= 12000

Add the new lifo layer at end of period prices

to prior year lifo inventory

112000*1= 112000

12000*1.1= 13200

inventory to be shown 125200