Pharoah Company had ending inventory at end-of-year prices of $183,000 at December 31, 2016; 204,600 at December 31, 2017; and $213,500 at December 31, 2018

Accounting Dec 17, 2020

Pharoah Company had ending inventory at end-of-year prices of $183,000 at December 31, 2016; 204,600 at December 31, 2017; and $213,500 at December 31, 2018. The year-end price indexes were 100 at 12/31/16, 106 at 12/31/17, and 110 at 12/31/18.

Compute the ending inventory for Pharoah Company for 2016 through 2018 using the dollar-value LIFO method.

Expert Solution

2016:-

Ending Inventory =$183,000

2017:-

=> $204600 / (100%+ 6%) = $ 193,018.87

=> $183,000 * 1 = $183,000

=> ($ 193,018.87 -$183,000) * (100%+ 6%) = $10,620

Ending Inventory = $183,000+ $10,620

= $193,620

2018:-

=> $213,500 /(100%+ 10%) = $194,090.91

=> $183,000 * 1 = $183,000

=> ($ 193,018.87 -$183,000) * (100%+ 6%) =$10,620

=> ($194,090.91- $183,000- ($ 193,018.87 -$183,000)) *(100%+ 10%) = $1,179.24

Ending Inventory = $183,000+ $10,620+ $1,179.24

= 194,799.24

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