Mercury Company has only one inventory pool. On December 31, 2018, Mercury adopt

Question

Mercury Company has only one inventory pool. On December 31, 2018, Mercury adopted the dollar-value LIFO inventory method. The inventory on that date using the dollar-value LIFO method was $214,000. 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. (Round "Year end cost index" to 2 decimal places.) Ending Inventory Layers Converted to Base Year Cost Inventory Layers Converted to Cost Inventory DVL Cost Inventory at Year- End Cost Year-End Cost Index Inventory Layers at Base Year Cost Inventory Layers at Base Year Cost Year-End Cost Index Inventory Layers Converted to Cost Date Base Base 2019 Base 2019 2020 Base 2019 2020 12/31/2018 12/31/2019 12/31/2020 12/31/2021

Explanation / Answer

Inventory layer converted to base year cost Inventory layer converted to cost Ending inventory Date Inventory at year end cost * Year end cost Index = Inventory layer at base year cost Inventory layer atbase year * Year end cost index = Inventory layer converted to cost 2018 214000 * 1 = 214000 Base 214000 * 1 = 214000 2019 260400 * 1.05   [260400/248000] 248000 Base 214000 * 1 = 214000 2019 248000-214000=34000 * 1.05 = 35700 249700 2020 347300 * 1.15    [347300/302000] = 302000 Base 214000 * 1 = 214000 2019 34000 * 1.05 = 35700 2020 302000-214000-34000= 54000 * 1.15 = 62100 311800 2021 350400 * 1.20    [350400/292000] = 292000 Base 214000 * 1 = 214000 2019 34000 * 1.05 = 35700 2020 292000-214000-34000=44000 * 1.15 = 50600 300300

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