Question

Return to question i Company uses the dollar-value LIFO method of computing inventory. An external price index is used to convert ending y to base year. The company began operations on January 1, 2021, with an inventory of $219,000. Year-end inventories at costs and cost indexes for its one inventory pool were as follows: 0.85 points r Ended ember 31 2021 2022 2023 2024 Ending Inventory at Year-End Costs $333,500 426,250 403,820 395,300 Cost Index (Relative to Base Ye 1.15 1.25 1.22 1.18 d: e inventory amounts at the end of each year. (Round intermediate calculations and final answers to the nearest whole

Could you please help me to figure out the problem? THANK YOU SO MUCH!

Answer 1

Dollar Value LIFO (DVL) uses last in first out method which says inventory which comes last goes first.

For the above method we have to first find the cost at base year price the we have to apply LIFO year by year i.e.

if there is sales in year 2023 then that means the sames is first from stock purchased in year 2023 then from 2022 stock.

In the given example, there is decrease of 10,000 in 2023 from 2022, that means there is sale of 10000 is 2022 stock (Last stock) and there is no stock left pertaining to year 2023 (all stock purchase in 2023 purchased is sold).

Year End Inventory Calculation
		Index	At base Year	Year End Inventory Cost			DVL Cost at year End
2021	3,33,500	1.15	2,90,000	2,19,000	1.00	2,19,000
				71,000	1.15	81,650	3,00,650
2022	4,26,250	1.25	3,41,000	2,19,000	1.00	2,19,000
				71,000	1.15	81,650
				51,000	1.25	63,750	3,64,400
2023	4,03,820	1.22	3,31,000	2,19,000	1.00	2,19,000
				71,000	1.15	81,650
				41,000	1.25	51,250	3,51,900
2024	3,95,300	1.18	3,35,000	2,19,000	1.00	2,19,000
				71,000	1.15	81,650
				41,000	1.25	51,250
				4,000	1.18	4,720	3,56,620

Yours answer is correct but Question is specifically asking for year end inventory but you have included opening inventory.

Try removing opening inventory value or if error not removing then there is some technical error in submission.