Use the following information for questions
Dolan Corporation adopted the dollar-value LIFO method of inventory valuation on December 31, 2005.Its inventory at that date was $220,000 and the relevant price index was 100.Information regarding inventory for subsequent years is as follows: $\begin{array}{lrr}& \text { Inventory at } & \text { Current } \
\text { Date } & \text { Current Prices } & \text { Price Index }\\hline
\text { December 31, 2006 } & \$ 256,800 & 107 \
\text { December 31, 2007 } & 290,000 & 125 \
\text { December 31,2008 } & 325,000 & 130
\end{array}$
-What is the cost of the ending inventory at December 31, 2006 under dollar-value LIFO?
A)$240,000.
B)$256,800.
C)$241,400.
D)$235,400.

Question

Use the following information for questions 
Dolan Corporation adopted the dollar-value LIFO method of inventory valuation on December 31, 2005.Its inventory at that date was $220,000 and the relevant price index was 100.Information regarding inventory for subsequent years is as follows: $\begin{array}{lrr}& \text { Inventory at } & \text { Current } \
\text { Date } & \text { Current Prices } & \text { Price Index }\\hline
\text { December 31, 2006 } & \$ 256,800 & 107 \
\text { December 31, 2007 } & 290,000 & 125 \
\text { December 31,2008 } & 325,000 & 130
\end{array}$
-What is the cost of the ending inventory at December 31, 2006 under dollar-value LIFO?
A)$240,000.
B)$256,800.
C)$241,400.
D)$235,400.

Quizplus · Accepted Answer

To calculate the ending inventory under dollar-value LIFO, first convert the ending inventory to base year prices: $256,800 / 1.07 = $240,000. The increase in base year inventory is $240,000 - $220,000 = $20,000. Convert this increase back to current year prices: $20,000 * 1.07 = $21,400. Add this to the base year inventory: $220,000 + $21,400 = $241,400.

Use the Following Information for Questions Dolan Corporation Adopted

Use the Following Information for Questions
Dolan Corporation Adopted