Question

Kingston Company uses the dollar-value LIFO method of computing inventory. An external price index is used to convert ending inventory to base year. The company began operations on January 1, 2021, with an inventory of $219,000. Year-end inventories at year-end costs and cost indexes for its one inventory pool were as follows: Ending Inventory Cost Index Year Ended (Relative to Base Year) December 31 at Year-End Costs $333,500 426,250 403,820 1.15 2021 2022 1.25 2023 1.22 2024 395,300 1.18 Required: Calculate inventory amounts at the end of each year. (Round intermediate calculations and final answers to the nearest whole dollars.)

Answer 1

Calculate inventory amount

	Inventory layers converted to base year cost						Inventory layers converted to Cost					Inventory DVL Cost
Date	Inventory at year end cost	/	Year end cost index	=	Inventory layers at base year cost		Inventory layers at base year cost	*	Year end cost index	=	Inventory layers converted to cash
01/01/2021	219000	/	1	=	219000	Base	219000	*	1	=	219000
12/31/2021	333500	/	1.15	=	290000	Base	219000	*	1	=	219000
						2021	71000	*	1.15	=	81650	300650
12/31/2022	426250	/	1.25	=	341000	Base	219000	*	1	=	219000
						2021	71000	*	1.15	=	81650
						2022	51000	*	1.25	=	63750	364400
12/31/2023	403820	/	1.22	=	331000	Base	219000	*	1	=	219000
						2021	71000	*	1.15	=	81650
						2022	41000	*	1.25	=	51250	351900
12/31/2024	395300	/	1.18	=	335000	Base	219000	*	1	=	219000
						2021	71000	*	1.15	=	81650
						2022	41000	*	1.25	=	51250
						2024	4000	*	1.18	=	4720	356620