Bonita Company had ending inventory at end-of-year prices of
$98,000 at December 31, 2019; $117,502 at December 31, 2020; and
$131,400 at December 31, 2021. The year-end price indexes were 100
at 12/31/19, 110 at 12/31/20, and 120 at 12/31/21.
Compute the ending inventory for Bonita Company for 2019 through
2021 using the dollar-value LIFO method.
LIFO method
2019 = $98000 (Sam's as before)
2020
Inventory at 2020 without indexation = $117502/1.1
= $106820
Increase in inventory = $106820 - $98000 = $8820
Inventory according to LIFO
= Last year inventory + (addition @ indexed amount)
= $98000 + ($8820*1.1)
= $107702
2021
Inventory of 2021 @ 2020 price
= $131400/1.2
= $109500
Change in inventory = $109500 - $106820
= $2680
Inventory at 2021 according to LIFO
= $98000 + ($8820*1.10) + ($2680*1.20)
= $110918
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