Question

Mercury Company has only one inventory pool. On December 31, 2021, Mercury adopted the dollar-value LIFO inventory method. The inventory on that date using the dollar-value LIFO method was $204,000. Inventory data are as follows: Year Ending Inventory at Year-End Costs Ending Inventory at Base Year Costs 2022 $ 239,400 $ 228,000 2023 312,800 272,000 2024 314,400 262,000 Required: Compute the inventory at December 31, 2022, 2023, and 2024, using the dollar-value LIFO method. (Round "Year end cost index" to 2 decimal places.)

Answer 1

2022 ending inventory 229,200

2023 ending inventory 278,420

2024 ending inventory 266,920‬

Step-by-step explanation:

Year at Year-End Costs ////// at Base Year Costs

2022 $ 239,400 $ 228,000

2023 $ 312,800 $ 272,000

2024 $ 314,400 $ 262,000

2022:

239,400 / 228,000 = 1.05 price index

Layers:

204,000 at 1.00 = 204,000

(228,000 - 204,000) x 1.05 = 25,200

Total Inventory 229,200

2023:

312,800 / 272,000 = 1.15 price index

Layers

204,000 at 1.00 204,000

24,000 at 1.05 25,200

(272,000 - 229,200) x 1.15 = 49,220

Total Inventory 278,420

2024:

As the base inventory decreased we have to decrease previous layer rather than create a new one.

204,000 at 1.00 204,000

24,000 at 1.05 25,200

( 262,000 - 229,200 ) x 1.15 37,720

Total Inventory 266,920‬