On January 1, 2020, Crow Company changed from FIFO to LIFO for income tax and external reporting purpos-es. On that same date, the beginning FIFO inventory (the base inventory for LIFO purposes) was $95,000. Thefollowing information is available from Crow's records for years 2020 through 2023.Year2020202120222023Ending Inventory on a FIFO Basis Ending Inventory at Base Year Costs$113,60084,60085,20092,900a.$125,000110,000115,000130,000RequiredCompute the price indices used to calculate ending inventory at base year costs. Round to two decimals.Hint: Divide ending inventory on a FIFO basis by ending inventory at base year for each year.b. Compute the ending inventory on a dollar-value LIFO basis for each year, 2020 through 2023.Prepare the journal entry at each year-end, 2020 through 2023, to adjust inventory to LIFO.

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Required a. Compute the price indices used to calculate ending inventory at base year costs. Round to two decimals. Hint: Divide ending inventory on a FIFO basis by ending inventory at base year for each year. b. Compute the ending inventory on a dollar-value LIFO basis for each year, 2020 through 2023. C. Prepare the journal entry at each year-end, 2020 through 2023, to adjust inventory to LIFO.

Required a. Compute the price indices used to calculate ending inventory at base year costs. Round to two decimals. Hint: Divide ending inventory on a FIFO basis by ending inventory at base year for each year. b. Compute the ending inventory on a dollar-value LIFO basis for each year, 2020 through 2023. C. Prepare the journal entry at each year-end, 2020 through 2023, to adjust inventory to LIFO.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter7: Inventories: Cost Measurement And Flow Assumptions

Section: Chapter Questions

Problem 21E: Grimstad Company uses FIFO for internal reporting purposes and LIFO for financial reporting and...

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Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.

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On January 1, 2020, Crow Company changed from FIFO to LIFO for income tax and external reporting purpos-
es. 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.
Year
2020
2021
2022
2023
Ending Inventory on a FIFO Basis Ending Inventory at Base Year Costs
$113,600
84,600
85,200
92,900
a.
$125,000
110,000
115,000
130,000
Required
Compute the price indices used to calculate ending inventory at base year costs. Round to two decimals.
Hint: Divide ending inventory on a FIFO basis by ending inventory at base year for each year.
b. Compute the ending inventory on a dollar-value LIFO basis for each year, 2020 through 2023.
Prepare the journal entry at each year-end, 2020 through 2023, to adjust inventory to LIFO.

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