Question

Gross Corporation adopted the dollar-value LIFO method of inventory valuation on December 31, 2019. Its inventory at that date was $1,100,000 and the relevant price index was 100. Information regarding inventory for subsequent years is as follows: Inventory at Current Date Current Prices Price Index December 31, 2020 $1,284,000 1.07 December 31, 2021 1,450,000 1.25 December 31, 2022 1,625,000 1.30 What is the cost of the ending inventory at December 31, 2020 under dollar-value LIFO?

Answer 1

$1,281,200

Step-by-step explanation:

Gross Corporation

Ending inventory

2019 1100000

2020 1284000/1.07 = 1200000

Ending Inventory(1100000+100000*1.07) = 1207000

2021 1450000/1.25 = 1160000

Ending inventory(1100000+60000*1.07) = 1164200

2022 1625000/1.30 = 1250000

Ending inventory(1164200+90000*1.30) = $1281200

Therefore the cost of the ending inventory at December 31, 2020 under dollar-value LIFO will be $1,281,200