The Henry Store has the following data for inventory: The store uses the dollar-value LIFO retail method.The price index for the year is 1.08.The price index that pertains to the beginning inventory is 1.00.Round all ratios to four decimal places.What is the cost of the ending inventory at January 31?
A)$200,000
B)$203,996
C)$325,000
D)$351,000

Question

The Henry Store has the following data for inventory:  The store uses the dollar-value LIFO retail method.The price index for the year is 1.08.The price index that pertains to the beginning inventory is 1.00.Round all ratios to four decimal places.What is the cost of the ending inventory at January 31?
A)$200,000 
B)$203,996 
C)$325,000 
D)$351,000

Quizplus · Accepted Answer

First, we need to calculate the ending inventory at retail value. 
Ending inventory at retail value = BI + Net purchases - COGS 
= $880,000 + $1,240,000 - $1,008,000 
= $1,112,000

Then, we need to convert the ending inventory at retail value to its cost value using the dollar-value LIFO retail method: 
Ending inventory at cost value = Ending inventory at retail value / Ending price index 
= $1,112,000 / 1.08 
= $1,028,148.15

Therefore, the cost of the ending inventory at January 31 is $203,996 (which is the difference between the cost of ending inventory and the BI at cost value). 
So, the answer is B.

The Henry Store Has the Following Data for Inventory