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Expert-verified Found in: Page 435 ### Intermediate Accounting (Kieso)

Book edition 16th
Author(s) Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
Pages 1552 pages
ISBN 9781118743201

# Presented below is information related to Kaisson Corporation for the last 3 years.Quantities Base-Year Cost Current-Year Costin EndingItem Inventories Unit Cost Amount Unit Cost AmountDecember 31, 2016A 9,000 $2.00$18,000 $2.20$19,800B 6,000 3.00 18,000 3.55 21,300C 4,000 5.00 20,000 5.40 21,600Totals $56,000$62,700December 31, 2017A 9,000 $2.00$18,000 $2.60$23,400B 6,800 3.00 20,400 3.75 25,500C 6,000 5.00 30,000 6.40 38,400Totals $68,400$87,300December 31, 2018A 8,000 $2.00$16,000 $2.70$21,600B 8,000 3.00 24,000 4.00 32,000C 6,000 5.00 30,000 6.20 37,200Totals $70,000$90,800InstructionsCompute the ending inventories under the dollar-value LIFO method for 2016, 2017, and 2018. The base period is January 1, 2016,and the beginning inventory cost at that date was $45,000. Compute indexes to two decimal places. Dollar value LIFO for 2016, 2017, and 2018 are$57,320, $73,192, and$75,256 respectively. Price index are 112, 128, and 129 for given years, respectively.

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## Price index schedule

 Inventories at Current Year cost / Inventories at Base year cost = Price Index Dec 2016 $62,700 /$56,000 = 1.12 or 112% Dec 2017 $87,300 /$68,400 = 1.28 or 128% Dec 2018 $90,800 /$70,000 = 1.29 or 129%

## Inventories at dollar value LIFO

 Date Ending inventory at base year Layer X Price Index = Dollar value LIFO 2015 $45,000$45,000 X 100 = $45,000 2016$56,000 $11,000 X 112 =$12,320 $57,320 2017$68,400 $12,400 X 128 =$15,872 $73,192 2018$70,000 $1,600 X 129 =$2,064 $70,000$75,256 ### Want to see more solutions like these? 