a. Explanation Last-in First-out Method (LIFO): Last-in First-out method is used to estimate the value of inventory stored at the end of an accounting period, and the cost of goods sold during the period. Under this method, it is assumed that the most recent inventory is sold last and the older inventory will be sold first. Thus, the cost of most recent inventories is assigned to cost of goods sold and the older inventory cost becomes the cost of ending inventory. Calculate the ending inventory at base price index as shown below. Year Cumulative price index Ending inventory at base price ($) 2018 1.0000 356,000 2019 1.0230 371,163 2020 1.0537 392,901 Table - 1 Calculate the increase in inventory at base price index. Year Ending inventory at base price ($) Beginning inventory at base price ($) Increment 2018 356,000 - - 2019 371,163 356,000 15,163 2020 392,901 371,163 21,738 Table – 2 Calculate the increase in inventory at current price index. Year Cumulative price index Increment at base price Increment at current price 2018 1.0000 - - 2019 1.0230 15,163 15,512 2020 1... b. To determine To prepare: The journal entries to adjust the LIFO reserve for each year.

2nd Edition

ISBN: 9780134730370

Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella

Publisher: PEARSON

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Chapter 10, Problem 10.7E

To determine

The ending inventory of the company using the dollar-value LIFO for each year.

To determine

To prepare: The journal entries to adjust the LIFO reserve for each year.

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Chapter 10, Problem 10.6E

Chapter 10, Problem 10.8E

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The ending inventory of the company using the dollar-value LIFO for each year.

Solution Summary: The author explains the Last-in First-out method used to estimate the value of inventory stored at the end of an accounting period, and the cost of goods sold during the period.

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The ending inventory of the company using the dollar-value LIFO for each year.

To prepare: The journal entries to adjust the LIFO reserve for each year.

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Chapter 10 Solutions