To calculate the inventory amounts at the end of each year, we need to use the dollar-value LIFO inventory method and the given cost indexes.
First, we'll calculate the inventory amount at the end of 2021:
2021 inventory = base year inventory + (year-end costs - base year costs) / cost index
2021 inventory = $260,000 + ($340,000 - $260,000) / 1.02
2021 inventory = $260,000 + $78,431.37
2021 inventory = $338,431
Next, we'll calculate the inventory amount at the end of 2022:
2022 inventory = base year inventory + (year-end costs - base year costs) / cost index
2022 inventory = $260,000 + ($350,000 - $260,000) / 1.06
2022 inventory = $260,000 + $84,905.66
2022 inventory = $344,906
Then, we'll calculate the inventory amount at the end of 2023:
2023 inventory = base year inventory + (year-end costs - base year costs) / cost index
2023 inventory = $260,000 + ($400,000 - $260,000) / 1.07
2023 inventory = $260,000 + $140,186.92
2023 inventory = $400,187
Finally, we'll calculate the inventory amount at the end of 2024:
2024 inventory = base year inventory + (year-end costs - base year costs) / cost index
2024 inventory = $260,000 + ($430,000 - $260,000) / 1.10
2024 inventory = $260,000 + $163,636.36
2024 inventory = $423,636
Therefore, the inventory amounts at the end of each year are as follows:
2021: $338,431
2022: $344,906
2023: $400,187
2024: $423,636
On January 1, 2021, Avondale Lumber adopted the dollar-value LIFO inventory method. The inventory value for its one inventory pool on this date was $260,000. An internally generated cost index is used to convert ending inventory to base year. Year-end inventories at year-end costs and cost indexes for its one inventory pool were as follows: Year Ended Inventory Cost Index December 31 Year-End Costs (Relative to Base Year) 2021 $ 340,000 1.02 2022 350,000 1.06 2023 400,000 1.07 2024 430,000 1.10 Required: Calculate inventory amounts at the end of each year. (Round intermediate calculations and final answers to the nearest whole dollars.)
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