Kelcie Sports uses the dollar-value LIFO retail method. The price index on January 1, 2014, was 100, and on that date the inventory was $20,000 (retail) and $14,000 (cost). Additional information follows: $\begin{array}{lll}
\underline{2015}&\underline{2014}&\
\$ 204,000 & \$ 160,000 & \text { Purchases, retail } \
150,960 & 115,200 & \text { Purchases, cost } \
202,160 & 160,416 & \text { Sales } \
103 & 102 & \text { Price index, Dec. 31 }
\end{array}$
What is the cost of the December 31, 2015, inventory (to the nearest dollar)?

Question

Kelcie Sports uses the dollar-value LIFO retail method. The price index on January 1, 2014, was 100, and on that date the inventory was $20,000 (retail) and $14,000 (cost). Additional information follows: $\begin{array}{lll}
\underline{2015}&\underline{2014}&\
\$ 204,000 & \$ 160,000 & \text { Purchases, retail } \
150,960 & 115,200 & \text { Purchases, cost } \
202,160 & 160,416 & \text { Sales } \
103 & 102 & \text { Price index, Dec. 31 }
\end{array}$
 What is the cost of the December 31, 2015, inventory (to the nearest dollar)?

Quizplus · Accepted Answer

The cost of the December 31, 2015, inventory is calculated using the dollar-value LIFO retail method. First, calculate the ending inventory at retail for 2015, then convert it to base year dollars using the price index, and finally convert it to cost using the cost-to-retail ratio. The correct calculation results in $14,660.

Kelcie Sports Uses the Dollar-Value LIFO Retail Method What Is the Cost of the December 31, 2015, Inventory