Question

The following information relates to the Thomas Taylor Company.

Date		Ending Inventory (End-of-Year Prices)				Price Index
December 31, 2016			$ 65,200			100
December 31, 2017			106,560			120
December 31, 2018			114,444			132
December 31, 2019			130,287			137
December 31, 2020			122,980			143

Use the dollar-value LIFO method to compute the ending inventory for Taylor Company for 2016 through 2020.

			Ending Inventory
2016			$
2017			$
2018			$
2019			$
2020			$

Answer 1

Inventory as on 2016 will be inventory at base price

= $65,200

Inventory as on 2017

= 106,560/120

= 88,800

Change from prior period

= 88,800 - 65,200

= 23,600

Inventory calculation

= 65,200*1 + 23,600*1.20

= $93,520

Inventory as on 2018

= 114,444/132

= 86,700

Change from prior period

= 86,700 - 88,800

= 2,100

Inventory calculation

= 65,200*1 + (23,600-2,100)*1.20

= $91,000

Inventory as on 2019

= 130,287/137

= 95,100

Change from prior period

= 95,100 - 86,700

= 8,400

Inventory calculation

= 65,200*1 + 21,500*1.20 + 8,400*1.37

= $102,508.

Inventory as on 2020

= 122,980/143

= 86,000

Change from prior period

= 86,000 - 95,100

= (9,100)

Inventory calculation

= 65,200*1 + 20,800*1.2

= $90,160

( In above calculation negative inventory is 9,100 which is to be reduced from the 8,400 and the remaining $700 will be reduced from 21,500).