In 2018, 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: 2017 - $300,000; 2018 - $350,000. The 2017 price index is 110% and the 2018 index is 120%. The 2018 ending inventory after adopting the LIFO method is

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Quizplus · Accepted Answer

To calculate the ending inventory using the simplified LIFO method, adjust the 2018 FIFO inventory by the change in the price index. The 2018 FIFO inventory is $350,000. The price index change from 2017 to 2018 is 120%/110% = 1.0909. Therefore, the LIFO inventory is $350,000 / 1.0909 = $322,727.

In 2018, Richard's Department Store Changes Its Inventory Method from FIFO