Question

Mercury Company has only one inventory pool. On December 31, 2021, Mercury adopted the dollar-value LIFO inventory method. The inventory on that date using the dollar-value LIFO method was $209,000. Inventory data are as follows:

Year	Ending Inventory at Year-End Costs			Ending Inventory at Base Year Costs
2022	$	249,900		$	238,000
2023		330,050			287,000
2024		332,400			277,000

Answer 1

SOLUTION:

COMPUTATION OF INVENTORY SUING THE DOLLAR VALUE LIFO METHOD:

								INVENTORY DOLLAR VALUE LIFO COST
DATE	A)INVENTORY AT YEAR END COST	B)YEAR END COST INDEX	C)INVENTORY LAYERS AT BASE YEAR COST(A/B)		D)INVENTORY LAYERS AT BASE YEAR COST	E)YEAR END COST INDEX	F)INVENTORY LAYERS CONVERTED TO CASH(D*E)
12/13/2021	209000	1	209000	BASE	209000	1	207000	207000
12/31/2022	249900	1.05	238000	BASE	209000	1	209000
				2022	*29000	1.05	30450	30450
								237450
12/31/2023	330050	1.15	287000	BASE	209000	1	209000
				2022	29000	1.05	30450
				2023	*78000	1.15	89700	329150
12/31/2021	332400	1.20	277000	BASE	209000	1	209000
				2022	29000	1.05	30450
				2023	*39000	1.15	44850
				2024		1.20		239450

*29000=238000-209000

*78000=287000-209000

*39000=277000-209000-29000