The Johnson Manufacturing Company manufactures a single product. The managers, Ron and Ken Johnson decided on December 31, 2005, to adopt the dollar-value LIFO inventory method. The inventory value on that date using the newly adopted dollar-value LIFO method was $500,000. Additional information follows: Inventory at Year-End Prices Year-End Price Index Date Dec 31, 2006 Dec 31, 2007 Dec 31, 2008 $ 6,05,000 5,97,360 7,00,000 1.10 1.14 1.25 Compute the inventory value at December 31 of each year using the dollar-value method, assuming incremental layers are valued at year- end prices.

SWFT Individual Income Taxes
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Chapter18: Accounting Periods And Methods
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The Johnson Manufacturing Company manufactures a single product.
The managers, Ron and Ken Johnson decided on December 31, 2005,
to adopt the dollar-value LIFO inventory method. The inventory value on
that date using the newly adopted dollar-value LIFO method was
$500,000. Additional information follows:
Inventory at Year-End Prices Year-End Price Index
Date
Dec 31, 2006
Dec 31, 2007
Dec 31, 2008
$ 6,05,000
5,97,360
7,00,000
1.10
1.14
1.25
Compute the inventory value at December 31 of each year using the
dollar-value method, assuming incremental layers are valued at year-
end prices.
Transcribed Image Text:The Johnson Manufacturing Company manufactures a single product. The managers, Ron and Ken Johnson decided on December 31, 2005, to adopt the dollar-value LIFO inventory method. The inventory value on that date using the newly adopted dollar-value LIFO method was $500,000. Additional information follows: Inventory at Year-End Prices Year-End Price Index Date Dec 31, 2006 Dec 31, 2007 Dec 31, 2008 $ 6,05,000 5,97,360 7,00,000 1.10 1.14 1.25 Compute the inventory value at December 31 of each year using the dollar-value method, assuming incremental layers are valued at year- end prices.
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