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Two years ago Angle Company starting using dollar-value LIFO for costing its inventory. The first year the ending inventory in end-of-year dollars was $180,000 with a price index of 1.0. The second year the inventory was $270,000 and the index was 1.2. The current inventory at end of year prices is $387,000 and the price index is 1.25. Given this information, the ending inventory using dollar-value LIFO is

Sagot :

anthougo

Answer:

Angle Company

Given this information, the ending inventory using dollar-value LIFO is:

= $309,600.

Explanation:

a) Data and Calculations:

Year     Inventory value    Price Index     Inventory Value

                                                               using dollar-value

                                                                          LIFO

1                 $180,000              1.0                $180,000 ($180,000/1.0)

2                 270,000              1.2                 225,000 ($270,000/1.2)

3.                387,000              1.25               309,600 ($387,000/1.25)

b) The Inventory value using dollar-value LIFO converts the inventory value to the base year's value using the price index.  It is an attempt to rebase the dollar value of the current ending inventory, using the changes in the price index.

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