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Triss [41]
1 year ago
14

Mercury Company has only one inventory pool. On December 31, 2021, Mercury adopted the dollar-value LIFO inventory method. The i

nventory on that date using the dollar-value LIFO method was $201,000. Inventory data are as follows:
Year Ending Inventory at Year-End Costs Ending Inventory at Base Year Costs
2019 $260,400 $248,000
2020 347,300 302,000
2021 350,400 292,000

Required:
Compute the inventory at December 31, 2019, 2020, and 2021, using the dollar-value LIFO method.
Business
1 answer:
ioda1 year ago
6 0

Answer:

Explanation:

The cost index can be calculated as follows:

<u>In 2019:</u>

= 260400/248000

= 1.05

<u>In 2020:</u>

= 347300/302000

= 1.15

<u>In 2021:</u>

= 350400/292000

= 1.2

Inventory Layers converted to the base cost

Date        \text{(Inventory at }  \ \ \ \ \  \ \ \ \text{(year-end } \\ \\ \text{ year end cost) }  \div \ \ \  \text{cost index) } = \ \ \ \ \ \  \ \text{ Inventory layers(base year cost) }

12/31/20   201000            ÷        1               =           201000

12/31/20  260400            ÷        1.05          =           248000

12/31/20   347300            ÷        1.15           =            302000

12/31/20    350400           ÷        1.2            =            292000

Inventory Layers converted to cost                  Ending Inventory  DVL cost

\text{(Inventory layers }  \    \ \text{("year-end } \\ \\ \text{ base year cost) }  \times   \text{ cost index") } = \ \ \text{ Inventory layers(cost) }

Base

201000            ×        1                = 201000

201000            ×        1                = 201000

Dec 31, 2019

<u>47000              ×        1.05           = 49350                                     </u>

<u>ADD                                               </u><u> 250350</u><u>                                 </u>

Base

201000            ×        1                = 201000

Dec 31, 2019

47000              ×        1.05           = 49350

Dec 31, 2020

(302000 - 248000)

<u>= 54000           ×        1.15             = 62100                  </u>

<u>ADD                                                </u><u>312450</u><u>                  </u>

Base

201000            ×        1                = 201000

Dec 31, 2019

47000              ×        1.05           = 49350

Dec 31, 2021

(292000 - 248000)

<u>= 44000           ×        1.15             =  50600         </u>

<u>ADD                                                </u><u>300950</u><u>        </u>

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