Victor Manufacturing Co. switched from FIFO to LIFO on January 1, 2004 for external reporting and income tax purposes, while retaining FIFO for internal reports. On that date the FIFO inventory equaled $360,000. The ensuing three-year period resulted in the following:Date InventoryYear-End CostsCost IndexDecember 31, 2004$438,0001.05December 31, 2005460,0001.25December 31, 2006520,0001.35The ending inventory at December 31, 2005, using the Dollar-value LIFO method would bea. $370,000b. $402,000c. $368,400d. $368,000

The right answer is option c. $368,400

Answered: Inventory Year-End Costs Cost Index…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Victor Manufacturing Co. switched from FIFO to LIFO on January 1, 2004 for external reporting and income tax purposes, while retaining FIFO for internal reports. On that date the FIFO inventory equaled $360,000. The ensuing three-year period resulted in the following:

Date	Inventory Year-End Costs	Cost Index
December 31, 2004	$438,000	1.05
December 31, 2005	460,000	1.25
December 31, 2006	520,000	1.35

The ending inventory at December 31, 2005, using the Dollar-value LIFO method would be
a. $370,000
b. $402,000
c. $368,400
d. $368,000

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