University:
California State University, Northridge
Course:
ACCT 350 | Intermediate Financial Accounting I
Academic year:

2024
Views:

336

Pages:

2
Author:

Moises Maddox

Dollar Value LIFO III (Example) Year 1 Index Beginning inventory $200.0 Purchases $2,200.0 total goods available for sale $2,400.0 ending inventory at current cost (per count) $330.0 ending inventory at base cost: 330/110*100 $351.0 less beginning inventory at base cost 110 -$200.0 increase at base cost $100.0 increase at current cost: 100*110/100 $110.0 $ value LIFO ending inventory: increase $110.0 beginning inventory 100 $200.0 $310.0 $2,090.0 cost of goods sold: Example continued: Year 2 2 layers: index 100, index 110 Beginning inventory (dollar value LIFO) $310.0 Purchases $3,000.0 total goods available for sale $3,310.0 ending inventory at current cost (per count) $400.0 ending inventory at base cost: 400/115*100 $347.8 less beginning inventory at base cost -$351.0 increase at base cost increase at current cost: 100*110/100 115 $47.8 48*115/100 $55.0 $ value LIFO ending inventory: increase beginning inventory $55.0 $310.0 $365.0 $2,945.0 cost of goods sold: Example continued: Year 3 3 layers: index 100, index 110 and 115 Beginning inventory (dollar value LIFO) $365.0 Purchases $3,351.0 total goods available for sale $3,665.0 ending inventory at current cost (per count) $400.0 ending inventory at base cost: 400/120*100 400/115*100 $333.3 less beginning inventory at base cost decrease at base cost decrease at current cost: 67*115/100 -$347.8 -$14.5 14*115/100 -$16.7 120 $ value LIFO ending inventory: increase -$16.7 beginning inventory $365.0 $348.3 $ value LIFO ending inventory: 3316.667 cost of goods sold: Alternative calculation: ending inventory at base cost: 400/120*100 400/115*100 layer at index 115: $333.3 $33.0 $38.3 layers at 100 and 110 $310.0 $ value LIFO ending inventory: $348.3 Note that because of the reduction, there will never be a layer at index 120: Year 4 3 layers: index 100, index 110 and 115 Beginning inventory (dollar value LIFO) $348.3 Purchases $3,800.0 total goods available for sale $4,148.3 ending inventory at current cost (per count) $600.0 ending inventory at base cost: 600/125*100 400/115*100 $480.0 less beginning inventory at base cost 125 -$333.3 increase at base cost $146.7 increase at current cost: 146.7*125/100 14*115/100 $183.3 $ value LIFO ending inventory: increase $183.3 beginning inventory $348.3 $531.7 $ value LIFO ending inventory: 3616.667 cost of goods sold: The ending inventory in year 4 consists of the folowing layers: base current base layer $200.0 $200.0 100 year 1 $100.0 $110.0 110 year 2 $33.0 $38.3 115 year 4 $146.7 $183.3 125 $479.7 $531.7