Question

Opera Corp. uses dollar-value LIFO method of computing its inventory cost. Data for the past three years is as follows: Year ended Inventory at Price December 31. End-of-year Prices Index 2019 $650,000 1 .00 2020 1,260,000 1 .05 2021 1,350,250 1 .10 What is the 2020 inventory balance using dollar-value LIFO

Answer 1

$1,257,750

Step-by-step explanation:

Year ended inventory at price end-of-year prices index

December 31

2016 $650,000 1.00

2017 $1,260,000 1.05

2018 $1,350,250 1.10

2016 $650,000 / 1 = $650,000

2017 $1,260,000 / 1.05 = $1,200,000

$1,200,000 - $650,000 = $550,000 x 1.05 = $577,500

+ $650,000

$1,227,500

2018 $1,350,250 / 1.05 = $1,227,500

$1,227,500 - $650,000 - $550,000 = $27,500 x 1.1 = $30,250

+ $1,227,500

$1,257,750