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Dollar-Value LIFO Review Problem

XYZ Organization began procedures on January 1, 2010, and uses the dollar-value LIFO method for externally confirming inventory. XYZ Company uses an external cost index in its calculations. About January one particular, 2010, XYZ Company recently had an inventory of $50, 1000. The following information has been extracted from inventory records:

Year Ended

12 , 31

Closing Inventory

for Year-End Costs

Cost Index

(Relative to Base Year)

2010

$56, 160

1 . 04

2011

$62, 700

1 . 10

2012

$58, 800

1 . 20

2013

$76, 230

1 . twenty one

Required:

Calculate XYZ's ending inventory for each of the years ended January 31, 2010, 2011, 2012 and 2013.

Buck Value LIFO

Date of dollar-value computation

Inventory stated in current 12 months costs

Cost

Index

Inventory stated in base-year costs

Boost (decrease)

Altered

Layers

Reported Ending

Products on hand on B/S

1/1/10

$50, 000

1 . 00

$50, 000

50 dollars, 000

$50, 000*1. 0 = $50, 000

$50, 000

12/31/10

56, one hundred sixty

1 . 04

54, 000

4, 000

Base: 50, 000*1. 0 = 50, 000

2010: 4, 000*1. 04 sama dengan 4, one hundred sixty

$54, one hundred sixty

12/31/11

sixty two, 700

1 ) 10

57, 000

3, 000

Base: 50, 000*1. 0 sama dengan 50, 000

2010: four, 000*1. apr = some, 160

2011: 3, 000*1. 10 sama dengan 3, three hundred

$57, 460

12/31/12

58, 800

1 . 20

forty-nine, 000

(8, 000)

Basic: 49, 000*1. 0 = 49, 500

(all additional layers removed)

$49, 500

12/31/13

76, 230

1 ) 21

63, 000

18, 000

Bottom: 49, 000*1. 0 sama dengan 49, 1000

2013: 18, 000*1. 21 = sixteen, 940

$65, 940

Lower of Cost or Industry Review Difficulty

The Casper Golf Firm has five inventory products as of January 31, 2013:

Product

Cost

Replacement Cost

Sales Price

Advertising Costs

Tshirts

$28, five-hundred

$30, 1000

$40, 500

$8, 000

Pants

forty-four, 500

43, 000

50, 000

four, 000

Sneakers

10, 000

15, 500

16, 1000

5, 1000

Golf Clubs

thirty-three, 000

thirty four, 000

39, 000

eight, 000

Baseballs

20, 1000

14, 500

25, 000

4, 500

Total Inventory at Price: $136, 500

Assume that Casper has a regular gross revenue margin of 10% of selling price.

Essential:

1 . Compute the inventory value at 12/31/2013 assuming that the company is applicable the lower-of-cost-or-market rule with an individual item basis. Value NRV – Selling Costs – (10%*Selling Price)

Item

Replacement

Cost

NRV

NRV - NP

Designated

Market

Cost

LCM Inventory for 12/31/13

1

30, 500

32, 1000

28, 500

30, 000

28, 500

28, 500

2

43, 000

46, 000

forty one, 000

43, 000

44, 500

43, 000

three or more

15, 000

11, 500

9, 400

11, 000

10, 000

10, 000

4

thirty four, 000

23, 000

27, 100

thirty-one, 000

33, 000

31, 000

five

14, 1000

21, 500

18, 500

18, 500

20, 1000

18, five-hundred

Total Inventory: $131, 000

2 . Compute the inventory benefit at 12/31/2013 assuming that the business applies the lower-of-cost-or-market secret on a specific basis (clothing vs . equipment).

Clothing Category: Equipment Category

Item

Specified

Market

Cost

Item

Selected

Market

Price

1

40, 000

28, 500

4

31, 1000

33, 000

2

43, 000

44, 500

your five

18, five-hundred

20, 500

3

10, 000

15, 000

Category Totals: 84, 00083, 500 Category Total: 49, five-hundred 53, 000

LCM intended for Clothing Category: $83, 000 LCM to get Equipment Category: $49, five-hundred

Total Products on hand ($83, 500 + $49, 500) = $132, five-hundred

3. Record the diary entry to modify Casper's products on hand to market in 12/31/2013, if perhaps needed.

LCM on an Individual Item Basis:

$136, 500 inventory by cost - $131, 500 inventory for LCM = $5, 1000 (reduction necessary to state inventory at LCM)

Dr . COGS or Damage on Writedown of Products on hand $5, 000

Cr. Inventory or Allocated for Inventory$5, 000

LCM on a Particular Basis:

$136, 000 products on hand at price - $132, 500 products on hand at LCM = $3, 500

Doctor COGS or perhaps Loss upon Writedown of Inventory $3, 500

Crystal reports. Inventory or perhaps Allowance intended for Inventory$3, 500

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