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 $200,000. Inventory data are as follows Ending Inventory at Ending Inventory at Year 2019 2020 2021 Year-End Costs $231,00e 299,000 300,000 Base Year Costs $220,006 260,000 250,000 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 DVL Cost Inventory Layers Converted to Base Year Cost Inventory Layers Converted to Cost Inventory at Year- End Cost Year-End Cost Index Inventory Layers at Base Year Cost Year End Cost Index Inventory Layers Converted to Cost Inventory Date Layers at Base Year Cost 12/31/2018 Base Base 2019 Base 2019 2020 Base 2019 2020 12/31/2019 12/31/2020 12/31/2021

Explanation / Answer

Compute ending inventory :

Inventory layers converted to base year cost Inventory layers converted to cost Ending inventory DVL Cost Date 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 12/31/2018 200000 / 1 = 200000 Base 200000 * 1 = 200000 $200000 12/31/2019 231000 / 1.05 = 220000 Base 200000 * 1 = 200000 2019 20000 * 1.05 = 21000 $221000 12/31/2020 299000 / 1.15 = 260000 Base 200000 * 1 = 200000 2019 20000 * 1.05 = 21000 2020 40000 * 1.15 = 46000 $267000 12/31/2021 300000 / 1.20 = 250000 Base 200000 * 1 = 200000 2019 20000 * 1.05 = 21000 2020 30000 * 1.15 = 34500 $255500

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