Question

Use the following to answer question 80: Gross Corporation adopted the dollar-value LIFO method of inventory valuation on December 31, 2011. Its inventory at that date was $440,000 and the relevant price index was 100. Information regarding inventory for subsequent years is as follows: Inventory at Current Current Prices Price Index December 31, 2012 $513,600 107 December 31, 2013 580,000 125 December 31, 2014 650,000 130 80. What is the cost of the ending inventory at December 31, 2013 under dollar value LIFO

Answer 1

$465680

Step-by-step explanation:

For calculating the ending inventory under the dollar value LIFO method we will follow the 2 steps given as under:

Step1:

Y = Current Price at year end / Price Index at that time

Step2:

Ending Inventory = Opening Inventory value + (Y - Opening Inventory Value) * Index Value

For the Year 2012

Step 1:

Y = 513,600 / 1.07 = $480,000

Step 2:

Ending Inventory = $440,000 + ($480,000 - 440,000) * 1.07 = $482,800

Similarly for the year 2013

Step 1:

Y = 580000 / 1.25 = $464,000

Step 2:

Ending Inventory = $440,000 + ($464,000 - $440,000) * 1.07 = $465,680

The answer is $465680.