Question

On January 1, 2018, Badger Inc. adopted the dollar-value LIFO method. The inventory cost on this...

On January 1, 2018, Badger Inc. adopted the dollar-value LIFO method. The inventory cost on this date was $100,000. The ending inventory, valued at year-end costs, and the relative cost index for each of the next three years is below:

Year-end

Ending inventory at

year-end costs

Cost Index

2018

$

126,000

1.05

2019

130,000

1.10

2020

153,600

1.20

In determining the inventory balance should Badger report in its 12/31/2019 balance sheet:

A) An additional layer of $23,000 is added to the 1/1/2019 balance.

B) An additional layer of $22,000 is added to the 1/1/2019 balance.

C) An additional layer of $11,000 is added to the 1/1/2019 balance.

D) None of these answer choices are correct.

Answer:  C

Explanation: $143,000 ÷ 1.10 = $130,000. This includes the previous two layers, the first at $100,000 and the second at $20,000, plus another at $10,000. The third is then brought forward to 12/31/2019 by $10,000 × 1.10 = $11,000.

Can someone please explain where 143,000 is coming from?

Please solve this with clear steps & explainations shown as the given explaination doesn't make sense to me. Why isn't 130,0000 being divided by 1.1??

Homework Answers

Answer #1

Solution:-

C) An additional layer of $11,000 is added to the 1/1/2019 balance.

Explanation:-

Please check value of 2019's Ending inventory at year-end costs it should be 143,000.

So 143,000 / 1.10 = 130,000.

Firse layer (January 1, 2018) inventory cost 100,000
Second layer (126,000 / 1.05) - 100,000 20,000
Third layer (for 2019) (143,000 / 1.10) - (126,000 / 1.05) 10,000
The third is then brought forward to 12/31/2019 by 10,000 * 1.10 $11,000

If you keep 130,000 as 2019 Ending inventory at year-end costs than answer would be

D) None of these answer choices are correct.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
On January 1, 2021, Badger Inc. adopted the dollar-value LIFO method. The inventory cost on this...
On January 1, 2021, Badger Inc. adopted the dollar-value LIFO method. The inventory cost on this date was $100,700. The ending inventory, valued at year-end costs, and the relative cost index for each of the next three years is below: Year-end Ending inventory at year-end costs Cost Index 2021 $ 128,205 1.05 2022 146,080 1.10 2023 156,540 1.20 In determining the inventory balance for Badger to report in its 12/31/2022 balance sheet: Multiple Choice An additional layer of $11,770 is...
On January 1, 2018, Badger Inc. adopted the dollar-value LIFO method. The inventory cost on this...
On January 1, 2018, Badger Inc. adopted the dollar-value LIFO method. The inventory cost on this date was $101,300. The ending inventory, valued at year-end costs, and the relative cost index for each of the next three years is below: Year-end Ending inventory at year-end costs Cost Index 2018 $ 130,095 1.05 2019 148,720 1.10 2020 159,060 1.20 What inventory balance should Badger report on its 12/31/2018 balance sheet? $129,900 $125,030 $123,900 $101,300
On January 1, 2018, the Haskins Company adopted the dollar-value LIFO method for its one inventory...
On January 1, 2018, the Haskins Company adopted the dollar-value LIFO method for its one inventory pool. The pool’s value on this date was $700,000. The 2018 and 2019 ending inventory valued at year-end costs were $741,000 and $819,000, respectively. The appropriate cost indexes are 1.04 for 2018 and 1.05 for 2019. Required: Complete the below table to calculate the inventory value at the end of 2018 and 2019 using the dollar-value LIFO method. (Round "Year end cost index" to...
On January 1, 2018, the Flou Company adopted the dollar-value LIFO method. The inventory value for...
On January 1, 2018, the Flou Company adopted the dollar-value LIFO method. The inventory value for its one inventory pool on this date was $490,000. Inventory data for 2018 through 2020 are as follows: Date Ending Inventory at Year-End Costs Cost Index 12/31/2018 540,600 1.06 12/31/2019 598,500 1.14 12/31/2020 638,600 1.24 Calculate the dollar-value ending inventory for each year
On January 1, 2018, the National Furniture Company adopted the dollar-value LIFO method of computing inventory....
On January 1, 2018, the National Furniture Company adopted the dollar-value LIFO method of computing inventory. An internal cost index is used to convert ending inventory to base year. Inventory on January 1 was $200,000. Year-end inventories at year-end costs and cost indexes for its one inventory pool were as follows:                                Inventory at Cost Index Year Ended Year-end (Relative to December 31     Costs               Base Year)       2018 $259,200 1.08       2019 296,800 1.12       2020 299,000 1.15 Required: Compute inventory amounts at the...
On January 1, 2018, Sanderson Variety Store adopted the dollar-value LIFO retail inventory method. Accounting records...
On January 1, 2018, Sanderson Variety Store adopted the dollar-value LIFO retail inventory method. Accounting records provided the following information: Cost Retail Beginning inventory $ 53,250 $ 71,000 Net purchases 206,590 285,000 Net markups 9,000 Net markdowns 11,000 Net sales 268,000 Retail price index, end of year 1.04 During 2019, purchases at cost and retail were $233,135 and $333,050, respectively. Net markups, net markdowns, and net sales for the year were $6,000, $7,000, and $295,000, respectively. The retail price index...
On January 1, 2018, the Haskins Company adopted the dollar-value LIFO method for its one inventory...
On January 1, 2018, the Haskins Company adopted the dollar-value LIFO method for its one inventory pool. The pool’s value on this date was $700,000. The 2018 and 2019 ending inventory valued at year-end costs were $741,000 and $819,000, respectively. The appropriate cost indexes are 1.04 for 2018 and 1.05 for 2019. Required: Complete the below table to calculate the inventory value at the end of 2018 and 2019 using the dollar-value LIFO method. (Round "Year end cost index" to...
ABC Corp. uses the dollar-value LIFO method of computing its inventory cost. Information for the past...
ABC Corp. uses the dollar-value LIFO method of computing its inventory cost. Information for the past three years is presented below.                                                                                   LIFO               Year ed                 Inventory at                   Price             December 31       End-of-year Prices            Index             2017                       $143,000                        1.00             2018                         277,200                        1.05             2019                         308,000                        1.10             2020                         312,000                         1.20 What is the 2020 year-end inventory balance using dollar-value LIFO (do not type $) ?
On January 1, 2021, the Taylor Company adopted the dollar-value LIFO method. The inventory value for...
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 $300,000. Inventory data for 2021 through 2023 are as follows: Date Ending Inventory at Year-End Costs Cost Index 12/31/2021 $ 332,800 1.04 12/31/2022 368,500 1.10 12/31/2023 383,500 1.18 Required: Calculate Taylor's ending inventory for 2021, 2022, and 2023.
Mets Company adopted the dollar-value LIFO inventory method at December 31, 2017 The inventory on that...
Mets Company adopted the dollar-value LIFO inventory method at December 31, 2017 The inventory on that date using the dollar-value LIFO inventory method was $90,000. Inventory data are as follows:                                           Inventory at                           Price index             Year                    year-end prices                   (base year 2016)             2017                         $240,000                                   1.00             2018                           275,000                                   1.10             2019                           300,000                                   1.20 Instructions Compute the inventory at December 31, 2018, and 2019, using the dollar-value LIFO method for each year.                                                                                                                                                             2017-
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT