Question

Presented below is information related to Teal Mountain , Inc. Date End-of-Year Inventory (End-of-Year Prices) Price Index December 31, 2017 $1,250,000 100 December 31, 2018 1,575,000 105 December 31, 2019 1,573,000 110 December 31, 2020 1,872,000 117 Compute the ending inventory for Teal Mountain , Inc. for 2017 through 2020 using the dollar-value LIFO method.

Answer 1

2017 $1,250,000

2018 $1,512,500

2019 $1,439,000

2020 $1,637,900

Step-by-step explanation:

The computation of ending inventory is shown below:-

Year Inventory Price index Inventory at base Change from prior

at end year year years

2017 $1,250,000 100 $1,250,000 0

2018 $1,575,000 105 $1,500,000 $250,000

2019 $1,573,000 110 $1,430,000 ($70,000)

2020 $1,872,000 117 $1,600,000 $170,000

Inventory at base year prices

2017 = $1,250,000 ÷ 100 × 100 = $1,250,000

2018 = $1,575,000 ÷ 105 × 100 = $1,500,000

2019 = $1,573,000 ÷ 110 × 100 = $1,430,000

2020 = $1,872,000 ÷ 117 × 100 = $1,600,000

So, dollar value ending inventory

2017 $1,250,000 × 1.0 = $1,250,000

$1,250,000

2018 $1,250,000 × 1.0 = $1,250,000

$250,000 × 1.05 = $262,500

$1,512,500

2019 $1,250,000 × 1.0 = $1,250,000

($250,000 - $70,000) × 1.05 = $189,000

$1,439,000

2020 $1,250,000 × 1.0 = $1,250,000

($250,000 - $70,000) × 1.05 = $189,000

$170,000 × 1.17 = $198,900

$1,637,900

2017 $1,250,000

2018 $1,512,500

2019 $1,439,000

2020 $1,637,900