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 $203,000. Inventory data are as follows:

Year	Ending Inventory at Year-End Costs			Ending Inventory at Base Year Costs
2022	$	237,300		$	226,000
2023		309,350			269,000
2024		310,800			259,000

Required:
Compute the inventory at December 31, 2022, 2023, and 2024, using the dollar-value LIFO method. (Round "Year end cost index" to 2 decimal places.)

Answer 1

	inventory layers covered to base year cost					inventory layers covered to cost						ending inventory
date	inventory at year end cost	cost index		base year cost		base year cost	year end cost index		=	inventory at layers converted to cost
31/12/2021	203000	1.00	=	203000		base	203000	1.00	=	203000
31/12/2022	237300	1.05	=	226000		base	203000	1.00	=	203000
						2019	23000	1.05	=	21905		$ 224905
31/12/2023	309350	1.15	=	269000		base	203000	1.00	=	203000
						2019	23000	1.05	=	21905
						2020	43000	1.15	=	37391		$ 262296
31/12/2024	310800	1.20	=	259000		base	203000	1.00	=	203000
						2019	23000	1.05	=	21905
						2020	33000	1.15	=	28695		$ 253600

cost index =inventory at year end cost / inventory layers base year cost

inventory at layers converted cost = base year cost * year end cost index