On January 1, 2018, Badger Inc. adopted the dollar-value LIFO method. The inventory cost on...
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Accounting
On January 1, 2018, Badger Inc. adopted the dollar-value LIFO method. The inventory cost on this date was $100,000. The ending inventory, valued at year-end costs, and the relative cost index for each of the next three years is below:
Year-end
Ending inventory at
year-end costs
Cost Index
2018
$
126,000
1.05
2019
130,000
1.10
2020
153,600
1.20
In determining the inventory balance should Badger report in its 12/31/2019 balance sheet:
A) An additional layer of $23,000 is added to the 1/1/2019 balance.
B) An additional layer of $22,000 is added to the 1/1/2019 balance.
C) An additional layer of $11,000 is added to the 1/1/2019 balance.
D) None of these answer choices are correct.
Answer: C
Explanation: $143,000 1.10 = $130,000. This includes the previous two layers, the first at $100,000 and the second at $20,000, plus another at $10,000. The third is then brought forward to 12/31/2019 by $10,000 1.10 = $11,000.
Can someone please explain where 143,000 is coming from?
Please solve this with clear steps & explainations shown as the given explaination doesn't make sense to me. Why isn't 130,0000 being divided by 1.1??
Answer & Explanation
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