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 onthat date using the newly adopted dollar-value LIFO method was$500,000. Additional information follows:Inventory at Year-End Prices Year-End Price IndexDateDec 31, 2006Dec 31, 2007Dec 31, 2008$ 6,05,0005,97,3607,00,0001.101.141.25Compute the inventory value at December 31 of each year using thedollar-value method, assuming incremental layers are valued at year-end prices.

Given InformationBase Year (2005) Inventory = $500,000Price Indexes:2006: 1.102007: 1.142008:…

Answered: The Johnson Manufacturing Company…

SWFT Individual Income Taxes

43rd Edition

ISBN:9780357391365

Author:YOUNG

Publisher:YOUNG

Chapter18: Accounting Periods And Methods

Section: Chapter Questions

Problem 67P

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On January 1 of Year 1, Dorso Company adopted the dollar-value LIFO method of inventory costing. Dorsos December 31 ending inventory records are as follows: Year 1: Current cost, 20,000; Index, 100 Year 2: Current cost, 33,600; Index, 120 Using the dollar-value LIFO method, compute Dorsos December 31 ending inventory for Year 2.
Inventory Write-Down Stiles Corporation uses the FIFO cost flow assumption and is in the process of applying the LCNRV rule for each of two products in its ending inventory. A profit margin of 30% on the selling price is considered normal for each product. Specific data for each product are as follows: Inventory Write-Down Use the information in E8-1. Assume that Stiles uses the LIFO cost flow assumption and is applying the LCM rule. Required: 1. What is the correct inventory value for each product? 2. Next Level With regard to requirement 1, what effect does the imposition of the constraints on market value have on the inventory valuations?
Black Corporation uses the LIFO cost flow assumption. Each unit of its inventory has a net realizable value of 300, a normal profit margin of 35, and a current replacement cost of 250. Determine the amount per unit that should be used as the market value to apply the lower of cost or market rule to determine Blacks ending inventory.
Kulsrud Company would like to estimate the current inventory level. Using the gross profit method and the following information, estimate the current inventory level for Kulsrud Company. Goods available for sale 100,000 Net sales 150,000 Normal gross profit as a percent of sales 40%
LIFO and Inventory Pools On January 1, 2016, Grover Company changed its inventory cost flow method to the LIFO cost method from the FIFO cost method for its raw materials inventory. It made the change for both financial statement and income tax reporting purposes. Grover uses the multiple-pools approach under which it groups substantially identical raw materials into LIFO inventory pools. It uses weighted average costs in valuing annual incremental layers. The composition of the December 31, 2018, inventory for the Class F inventory pool is as follows: Inventory transactions for the Class F inventory pool during 2019 were as follows: On March 2, 2019, 4,800 units were purchased at a unit cost of 13.50 for 64,800. On September 1, 2019, 7,200 units were purchased at a unit cost of 14.00 for 100,800. A total of 15,000 units were used for production during 2019. The following transactions for the Class F inventory pool took place during 2020: On January 11, 2020, 7,500 units were purchased at a unit cost of 14.50 for 108,750. On May 14, 2020, 5,500 units were purchased at a unit cost of 15.50 for 85,250. On December 29, 2020, 7,000 units were purchased at a unit cost of 16.00 for 112,000. A total of 16,000 units were used for production during 2020. Required: 1. Prepare a schedule to compute the inventory (units and dollar amounts) of the Class F inventory pool at December 31, 2019. Show supporting computations in good form. 2. Prepare a schedule to compute the cost of Class F raw materials used in production for the year ended December 31, 2019. 3. Prepare a schedule to compute the inventory (units and dollar amounts) of the Class F inventory pool at December 31, 2020. Show supporting computations in good form.
Webster Company adopted do liar-value LIFO on January 1, 2019. Webster produces three products: X, Y, and Z. Websters beginning inventory consisted of the following: During 2019, Webster had the following purchases and sales: Required: 1. Compute the LIFO cost of the ending inventory assuming Webster uses a single inventory pool. Round cost index to 4 decimal places. 2. Compute the LIFO cost of the ending inventory assuming Webster uses three inventory pools. Round cost indexes to 4 decimal places.
Company Elmira reported the following cost of goods sold but later realized that an error had been made in ending inventory for year 2021. The correct inventory amount for 2021 was 32,000. Once the error is corrected, (a) how much is the restated cost of goods sold for 2021? and (b) how much is the restated cost of goods sold for 2022?
Lower of Cost or Market Garcia Company uses FIFO, and its inventory at the end of the year was recorded in the accounting records at $17,800. Due to technological changes in the market, Garcia would be able to replace its inventory for $16,500. Required: 1. Using the lower of cost or market method, what amount should Garcia report for inventory on its balance sheet at the end of the year? 2. Prepare the journal entry required to value the inventory at the lower of cost or market.
Dolan Corporation adopted the dollar-value LIFO method of inventory valuation on December 31, 2002. Its inventory at that date was $420,000 and the relevant price index was 100. Information regarding inventory for subsequent years is as follows: Date December 31, 2003 December 31, 2004 December 31, 2005 Inventory at Current Prices $535,000 580,000 676,000 Current Price Index 107 125 130 What is the cost of the ending inventory at December 31, 2003 under dollar-value LIFO? a. $500,000. b. $535,000. c. $505,600. d. $449,400.
Elster Company adopted the dollar-value LIFO method of inventory valuation on December 31, 2007. Its inventory on that date was $220,000, and the external price index on that date was 100. Here is additional information regarding the inventory: Inventory atPriceDateCurrent PricesIndex December 31, 2017 $220,000 100 December 31, 2018 $256,800 107 December 31, 2019 $290,000 125 December 31, 2020 $325,000 130 8.What is the cost of the ending inventory at December 31, 2018 under dollar-value LIFO? a.$240,000. b.$256,800. c.$241,400. d.$235,400. 9.What is the cost of the ending inventory at December 31, 2020 under dollar-value LIFO? a.$256,240. b.$254,400. c.$250,000. d.$259,000.
Marigold Company has used the dollar-value LIFO method for inventory cost determination for many years. The following data were extracted from Marigold’s records. Date PriceIndex Ending Inventoryat Base Prices Ending Inventoryat Dollar-Value LIFO December 31, 2017 105 $92,730 $86,050 December 31, 2018 ? 97,730 91,900 Calculate the index used for 2018 that yielded the above results. Index used for 2018
Compute the dollar-value LIFO inventory valuation for the December 31, 2013, inventory.

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