Webster Products, Inc., adopted the dollar-value LIFO method of determining inventory costs for financial and income tax reporting on January 1, 2016. Webster continues to use the FIFO method for internal decision-making purposes. Webster’s FIFO inventories at December 31, 2016, 2017, and 2018, were $300,000, $412,500, and $585,000, respectively. Internally generated cost indexes are used to convert FIFO inventory amounts to dollarvalue LIFO amounts. Webster estimated these indexes as follows: 2016 1.00 2017 1.25 2018 1.50 Required: 1. Determine Webster’s dollar-value LIFO inventory at December 31, 2017 and 2018. 2. Describe how the change should have been reported in Webster’s 2016 financial statements.

Question

Webster Products, Inc., adopted the dollar-value LIFO method of determining inventory costs for financial and income tax reporting on January 1, 2016. Webster continues to use the FIFO method for internal decision-making purposes. Webster’s FIFO inventories at December 31, 2016, 2017, and 2018, were $300,000, $412,500, and $585,000, respectively. Internally generated cost indexes are used to convert FIFO inventory amounts to dollarvalue LIFO amounts. Webster estimated these indexes as follows: 2016 1.00 2017 1.25 2018 1.50 Required: 1. Determine Webster’s dollar-value LIFO inventory at December 31, 2017 and 2018. 2. Describe how the change should have been reported in Webster’s 2016 financial statements.

Expert Answer

Want to see the step-by-step answer?

Check out a sample Q&A here.

Want to see this answer and more?

Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*

*Response times may vary by subject and question complexity. Median response time is 34 minutes for paid subscribers and may be longer for promotional offers.
Tagged in
Business
Accounting

Other

Related Accounting Q&A

Find answers to questions asked by students like you.

Q: The balance sheet of Indian River Electronics Corporation as of December 31, 2015, included 12.25% b...

A: Click to see the answer

Q: In 2016, Adonis Industries changed its method of valuing inventory from the average cost method to t...

A: Calculate the changes in inventory value.

Q: The Jennings Group reacquired 2 million of its shares at $70 per share as treasury stock. Last year,...

A: Treasury Stock: It refers to the shares reacquired by the corporation that are already issued to the...

Q: he accountant for the firm owned by Randy Guttery prepares financial statements at the end of each m...

A: Prepare a trial balance for Randy Guttery, Landscape Consultant.

Q: Should gains and losses on a fair value hedge be recorded as they occur, or should they be recorded ...

A:  

Q: DRS Corporation changed the way it depreciates its computers from the sum-of-the-year’s-digits metho...

A: 1.Indicate the type of change and how DRS should report the change. 

Q: Nestlé S.A., the largest food and beverage company in the world, prepares its financial statements a...

A: International Financial Reporting Standards:They are commonly known as IFRS. It is a set of accounti...

Q: Identify the three common forms of business organization and the primary difference between the way ...

A: Three common forms of business organization are:Sole proprietorship: It is one form of simple busine...

Q: What is intraperiod tax allocation?

A: Click to see the answer