Question

On January 1, 2021, the Taylor Company adopted the dollar-value LIFO method. The inventory value for its one inventory pool on this date was $400,000. Inventory data for 2021 through 2023 are as follows:

Date	Ending Inventory at Year-End Costs			Cost Index
12/31/2021	$	441,000		1.05
12/31/2022		487,200		1.12
12/31/2023		510,000		1.2

Required:
Calculate Taylor's ending inventory for 2021, 2022, and 2023

	Inventory Layers Converted to Base Year Cost					Inventory Layers Converted to Cost						Inventory DVL Cost
Date	Inventory at Year-End Cost		Year-End Cost Index		Inventory Layers at Base Year Cost		Inventory Layers at Base Year Cost		Year-End Cost Index	=	Inventory Layers Converted to Cost
01/01/2021	$400,000		1.00	=	$400,000	Base				=		$0
12/31/2021	$441,000		1.05	=	$420,000	Base				=
						2021				=		$0
12/31/2022	$4,872,000		1.12	=	$435,000	Base				=
						2021				=
						2022				=		$0
12/31/2023	$510,000		1.20	=	$425,000	Base				=
						2021				=
						2022				=
						2023				=		$0

Answer 1

Answer:

Inventory layers converted to base year cost

Inventory layers Converted to cost

Inventory DVL cost

Date	Inventory at year end cost	/	Year end cost index	=	Inventory layers at base year cost		Inventory layers at base year cost	*	Year end cost index	=	Inventory layers Converted to cash
01/01/2021	400000	/	1.00	=	400000	Base	400000	*	1	=	400000
12/31/2021	441000	/	1.05	=	420000	Base	400000	*	1	=	400000
						2021	20000	*	1.05	=	21000	421000
12/31/2022	487200	/	1.12	=	435000	Base	400000	*	1	=	400000
						2021	20000	*	1.05	=	21000
						2022	15000	*	1.12	=	16800	437800
12/31/2023	510000	/	1.20	=	425000	Base	400000	*	1	=	400000
						2021	20000	*	1.05	=	21000
						2022	5000	*	1.12	=	5600
						2023	0	*	0	=	0	426600

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