Question

On December 31, 20X1, a company adopted the dollar-value LIFO inventory method. Inventory at the end of 20X1 for its only inventory pool was $500,000 under the dollar-value LIFO method. At the end of 20X2, inventory at year-end cost is $672,000 and the cost index is 1.05. Inventory at the end of 20X2 at dollar-value LIFO cost is:

Answer 1

Answer is $647,000

Refer below.

Step-by-step explanation:

Inventory at end-of-20X2 year cost = $640,000 ($672,000 ¸ 1.05). Adjusting this to end-of-20X2 cost is $147,000 ($140,000 x 1.05) and adding this to the beginning inventory gives $647,000.