Exercise 89 Year Ended December 31 Inventory at CurrentYear

Exercise 8-9

Year Ended
December 31

Inventory at
Current-Year Cost

Price
Index

Exercise 8-9 Arna, Inc. uses the dollar-value LIFO method of computing its inventory. Data for the past 3 years follow. Year Ended December 31 Inventory at Current-Year Cost Price Index 2013 $18,600 100 2014 20,564 106 2015 24,408 113 Compute the value of the 2014 and 2015 inventories using the dollar-value LIFO method. 2014 2015 Inventory Under Dollar Value LIFO $ $

Solution

2014 inventory at base amount 19400 =20564/1.06 2013 inventory at base amount 18600 Increase in base inventory 800 2014 inventory under LIFO Layer one 18600 Layer two 848 =800*1.06 19448 2015 inventory at base amount 21600 =24408/1.13 2014 inventory at base amount 19400 Increase in base inventory 2200 2015 inventory under LIFO Layer one 18600 Layer two 848 =800*1.06 Layer three 2486 =2200*1.13 21934 2014 2015 Inventory Under Dollar Value LIFO 19448 21934