In 2019,Richard's Department Store changes its inventory method from FIFO to LIFO.Richard's uses the simplified LIFO method.Richard's year-end inventory under FIFO is as follows: 2018 - $300,000; 2019 - $350,000.The 2018 price index is 110% and the 2019 index is 120%.The 2019 ending inventory after adopting the LIFO method is
A)$350,000.
B)$320,833.
C)$381,818.
D)$322,727.

Question

Quizplus · Accepted Answer

To calculate the ending inventory under LIFO using the simplified method, adjust the 2019 FIFO inventory by the change in price index: $350,000 / 1.2 = $291,667. Then, adjust the 2018 inventory to the 2019 price level: $300,000 / 1.1 * 1.2 = $327,273. The difference is $327,273 - $291,667 = $35,606. Add this to the 2019 adjusted inventory: $291,667 + $35,606 = $327,273.

In 2019,Richard's Department Store Changes Its Inventory Method from FIFO