ivide ending inventory on a FIFO basis by ending im index of 1.42 for 1.424 or enter an index of 1.43 fo

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question
Computing and Recording Ending Inventory using Dollar-Value LIFO
On January 1, 2020, Crow Company changed from FIFO to LIFO for income tax and external reporting purposes. On that same date, the beginning FIFO inventory (the base inventory for LIFO purposes) was
$95,000. The following information is available from Crow's records for years 2020 through 2023.
Ending Inventory Ending Inventory
on a FIFO Basis at Base Year Costs
Year
2020
$125,000
$113,600
2021
110,000
84,600
2022
115,000
85,200
2023
130,000
92,900
a. Compute the price indices used to calculate ending inventory at base year costs. Hint: Divide ending inventory on a FIFO basis by ending inventory at base year for each year.
Note: Enter each price index rounded to two digits after the decimal; for example, enter an index of 1.42 for 1.424 or enter an index of 1.43 for 1.425.
Price
Year
Index
2019
2020
1.11 v
2021
1.3 V
2022
1.35 V
2023
1.4 v
b. Compute the ending inventory on a dollar-value LIFO basis for each year, 2020 through 2023.
• In step four (restating layers of inventory into current year dollars) use rounded indices from part a.
• Round final answers to the nearest whole dollar.
Dollar-value LIFO ending inventory, 2020$
Dollar-value LIFO ending inventory, 2021$
Dollar-value LIFO ending inventory, 2022$
0 x
0 x
Dollar-value LIFO ending inventory, 2023 $
0 x
Transcribed Image Text:Computing and Recording Ending Inventory using Dollar-Value LIFO On January 1, 2020, Crow Company changed from FIFO to LIFO for income tax and external reporting purposes. On that same date, the beginning FIFO inventory (the base inventory for LIFO purposes) was $95,000. The following information is available from Crow's records for years 2020 through 2023. Ending Inventory Ending Inventory on a FIFO Basis at Base Year Costs Year 2020 $125,000 $113,600 2021 110,000 84,600 2022 115,000 85,200 2023 130,000 92,900 a. Compute the price indices used to calculate ending inventory at base year costs. Hint: Divide ending inventory on a FIFO basis by ending inventory at base year for each year. Note: Enter each price index rounded to two digits after the decimal; for example, enter an index of 1.42 for 1.424 or enter an index of 1.43 for 1.425. Price Year Index 2019 2020 1.11 v 2021 1.3 V 2022 1.35 V 2023 1.4 v b. Compute the ending inventory on a dollar-value LIFO basis for each year, 2020 through 2023. • In step four (restating layers of inventory into current year dollars) use rounded indices from part a. • Round final answers to the nearest whole dollar. Dollar-value LIFO ending inventory, 2020$ Dollar-value LIFO ending inventory, 2021$ Dollar-value LIFO ending inventory, 2022$ 0 x 0 x Dollar-value LIFO ending inventory, 2023 $ 0 x
c. Prepare the journal entry at each year-end, 2020 through 2023, to adjust inventory to LIFO.
Date
Account Name
Dr.
Cr.
Dec. 31, 2020 Cost of Goods Sold
Allowance to Reduce FIFO Inventory to LIFO Basis +
0 x
Dec. 31, 2021 Cost of Goods Sold
Allowance to Reduce FIFO Inventory to LIFO Basis + v
0 x
Dec. 31, 2022 Cost of Goods Sold
Allowance to Reduce FIFO Inventory to LIFO Basis +
Dec. 31, 2023 Cost of Goods Sold
Allowance to Reduce FIFO Inventory to LIFO Basis + v
0 x
Transcribed Image Text:c. Prepare the journal entry at each year-end, 2020 through 2023, to adjust inventory to LIFO. Date Account Name Dr. Cr. Dec. 31, 2020 Cost of Goods Sold Allowance to Reduce FIFO Inventory to LIFO Basis + 0 x Dec. 31, 2021 Cost of Goods Sold Allowance to Reduce FIFO Inventory to LIFO Basis + v 0 x Dec. 31, 2022 Cost of Goods Sold Allowance to Reduce FIFO Inventory to LIFO Basis + Dec. 31, 2023 Cost of Goods Sold Allowance to Reduce FIFO Inventory to LIFO Basis + v 0 x
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps with 5 images

Blurred answer
Knowledge Booster
Revenue Recognition
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education