Question

for the Ferent What ection 41. Berry Co. started business in 2018. Its ending inventory was $150,000 at base-period prices. It uses the simplified dollar-value LIFO inventory method and the price index was 130% in 2018. Its ending inventory at actual prices in 2019 is $180,000 and the price index is 140%. What is Berry Co.'s 2019 ending inventory? e from the 2019? 42. Ludlow Inc. started business in 2018. It uses the simplified dollar-value LIFO inventory method. Ending inventories at actual prices are as follows: ve ugust est Year Amount $200,000 2018 2019 220,000 the 2020 225,000 ome The price index in 2018, 2019 and 2020 is 120%, 125%, and 130%, respectively. What are the dollar values of its ending inventory in 2019 and 2020? king

Answer 1

41)

Date	Price Index (%)	Inventory at base- year- prices	Change from prior year
2018	130	$150,000	0
2019	140	$180,000	$30,000

Compute the value of ending inventory at base-year-prices as follows:

2019

$150,000 $\times$ 1.3 = $195,000

$30,000 $\times$ 1.4 = $42,000

Dollar value LIFO inventory on 2019 = $195,000 + $42,0000 = $237,000

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42.

Date	Inventory at end-of-year prices	Price Index (%)	Inventory at base- year- prices	Change from prior year
2018	$200,000	120	$166,667	0
2019	$220,000	125	$176,000	$9,333
2020	$225,000	130	$173,077	($2,923)

Inventory at base-year-prices = Inventory at end-of-year prices  $\div$  price Index %

Compute the value of ending inventory at base-year-prices as follows:

2019

$166,667 $\times$ 1.2 = $200,000

$9,333 $\times$ 1.25 = $11,666

Dollar value LIFO inventory on 2019 = $200,000 + $11,666 = $211,666

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2020

$166,667 $\times$ 1.2 = $200,000

$9,333 $\times$ 1.25 = $11,666

($2,923) $\times$ 1.3 = ($3,800)

Dollar value LIFO inventory on 2019 = $200,000 + $11,666 - $3,800 = $207,866.