Question

Geese Company utilizes the dollar-value LIFO retail inventory method. Its cost-to-retail percentage is 60% based on beginning inventory and 64% based on current-period purchases. The company determined that beginning inventory at retail was $200,000 and that ending inventory at current-year retail prices was $250,000. The current-year price index is 1.10. During the current year, a new inventory layer at base-year retail prices was added in the amount of:__________ (round your answer to the nearest dollar amount)

Answer 1

$27,273

Step-by-step explanation:

Calculation for the new inventory layer at base-year retail price

Using this formula

New inventory layer at base-year retail prices=(Ending inventory at current-year retail prices/Current-year price index) - Beginning inventory at retail

Let plug in the formula

New inventory layer at base-year retail prices=($250,000/1.10) - $200,000

New inventory layer at base-year retail prices=

$227,273 - $200,000

New inventory layer at base-year retail prices=$27,273

Therefore During the current year, a new inventory layer at base-year retail prices was added in the amount of: $27,273