Intermediate Accounting (2nd Edition)
2nd Edition
ISBN: 9780134730370
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
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Textbook Question
Chapter 10, Problem 10.4P
Dollar-Value LIFO. The Happenings Company adopted the dollar-value LIFO inventory method on December 31, 2017, when the price index was 1.00. Ending inventory on the date that it adopted dollar-value LIFO follows.
Item | Number of Units | Total FIFO Cost |
MAS1840 | 280 | $ 840 |
JAS2307 | 850 | 5,950 |
TOTAL | $6,790 |
Information related to the year-end prices for the two years after the adoption of dollar-value LIFO is summarized in the following table.
December 31 | ||
Description | 2018 | 2019 |
Year-end prices (FIFO) - MAS1840 inventory | S 2,100 | S 2,639 |
Year-end prices (FIFO) - JAS2307 inventory | 10,030 | 16,800 |
The cumulative price index for 2018 is 1.3385, and the cumulative price index for 2019 is 1.4399. Treat both models as one group.
Required
- a. Calculate the ending inventory for 2018 at dollar-value LIFO and determine the LIFO reserve needed if any. Prepare the
journal entry to record the LIFO reserve. - b. Calculate the ending inventory for 2019 at dollar-value LIFO and determine the LIFO reserve needed if any. Prepare the journal entry to record the LIFO reserve.
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Intermediate Accounting (2nd Edition)
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