Question

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-

Answer 1

Solution:

Computation of inventory at base year prices and change from prior year -Mets Company
Year	Inventory at end of year prices	Price index	Inventory at base year prices	Change from Prior Years
2017	$240,000.00	1.00	$240,000.00	$0.00
2018	$275,000.00	1.10	$250,000.00	$10,000.00
2019	$300,000.00	1.20	$250,000.00	$0.00

Computation of dollar value inventory - LIFO
Particulars	Amount
December 31, 2017:
$240,000*$1	$240,000
Inventory at Dec 31, 2017	$240,000
December 31, 2018:
$240,000*$1	$240,000
$10,000*$1.10	$11,000
Inventory at Dec 31, 2018	$251,000
December 31, 2019:
$240,000*$1	$240,000
$10,000*$1.10	$11,000
Inventory at Dec 31, 2019	$251,000