Do not give solution in image Converting FIFO Inventory to Dollar-Value LIFO and Preparing Year-End Adjustments to the LIFO ReserveStetson Industries has been using FIFO for all internal and external reporting purposes. At the start of Year 5, the company adopted dollar-value LIFO for external financial statement and incometax purposes. Its derived internal price indices are: Year 4 is 1.00; Year 5 is 1.10; Year 6 is 1.15; and Year 7 is 1.20. The FIFO inventory records show the following for its single inventory pool.YearYear 4 Ending InventoryYear 5 Ending InventoryYear 6 Ending InventoryYear 7 Ending InventoryRequiredFIFO Basis$600,000699,600855,600864,000a. Convert the ending FIFO inventory to a LIFO basis for Year 5, Year 6, and Year 7, assuming the dollar-value LIFO method and using the internal price indices.Ending Inventory Price Ending InventoryDate (End of year prices) Index (Base year prices)Year 4 $600,000600,000 $Year 5636,000✔1.00 $699,600 1,10Inventory PriceLayers Index600,000 ✓ 1.00 S600,000 ✓ 1.0036,000 1.10✓Year 6✓855,600✔ 1.15744,000 ✓600,000 ✓ 1.0036,000 ✓ 1.10108,000✔ 1.155Ending Inventory(Dollar Value LIFO)600,000 ✓600,00039,600 ✓639,600600,000 ✓39,600✔124,200 ✓ Year 6Year 7855,600 ✓ 1.15864,000 ✓ 1.20DateDec. 31, Year 5 Cost of Goods Sold744,000 ✓720,000 ✓Dec. 31, Year 6 Cost of Goods Sold600,000 ✓36,000 ✓108,000✔Account Name600,000 ✓ 1.0036,000✔1.1084,000✔ 1.150✔ 1.20Allowance to Reduce FIFO Inventory to LIFO BasisTo adjust LIFO Reserveb. Prepare the December 31 year-end journal entry for Year 5, Year 6, and Year 7, to convert inventory from FIFO to LIFO.Allowance to Reduce FIFO Inventory to LIFO BasisTo adjust LIFO ReserveDec. 31, Year 7 Allowance to Reduce FIFO Inventory to LIFO BasisCost of Goods SoldTo adjust LIFO Reserve1.001.101.15VV$$Dr.3,6000108,0000600,000 ✓39,600✔124,200 ✓763,800600,000 ✓39,600✔96,60024,00000 ✓736,200Cr.0x3,600 x0x108.000 *0x24,000 x

Name: Do not give solution in image Converting FIFO Inventory to Dollar-Valu
Uploaded: 2024-03-20T06:32:37.000Z
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Description: Do not give solution in image Converting FIFO Inventory to Dollar-Value LIFO and Preparing Year-End Adjustments to the LIFO ReserveStetson Industries has been using FIFO for all internal and external reporting purposes. At the start of Year 5, the co