Question

Lemon Co. uses the dollar-value LIFO inventory method, which it adopted on December 31, 2020. Lemon's entire inventory constitutes a single dollar-value LIFO pool. On December 31, 2020 the inventory was $1,200,000 under the dollar-value LIFO method. Inventory data for 2021 are as follows: 12/31/21 inventory at year-end prices $ 1,450,000 Relevant price index at year end (base year 2020) 110 Using dollar value LIFO, Lemon's inventory at December 31, 2021 is $_____________. (In your cacluations, round all amounts to the nearest dollar.)

Answer 1

Answer: $1,330,000

Explanation:

Inventory at end year prices on 12/31/2020 = $1,200,000

Inventory at end year prices on 12/31/2021 = $1,450,000

Inventory at base year prices on 12/31/2021 = $1,450,000*(100/110) = $1,318,181.82

Change from prior year = $1,318,181.82 - $1,200,000 = $118,181.82

Dollar value inventory on 12/31/2021:

= $1,200,000 + ($118,181.82*110/100)

= $1,200,000 + $130,000

= $1,330,000

____________________________________

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