Computing Ending Inventory using Dollar-Value LIFO On January 1 of Year 5, Benn Company changed from FIFO to LIFO for income tax and external reporting purposes. At that date, the beginning FIFO inventory (the base inventory for LIFO purposes) was $224,000. The following information is available from Benn's records for Year 5 through Year 8. Year Ending Inventory on a FIFO Basis Price Index Year 5 $264,000 1.1 278,400 322,400 320,000 Year 6 Year 7 Year 8 1.2 1.3 1.2 Required Compute the ending inventory on a dollar-value LIFO basis for Year 5, Year 6, Year 7, and Year 8. Note: Do not round until your final answer. Round your final answer to the nearest whole dollar Dollar-value LIFO ending inventory, Year 5 $ Dollar-value LIFO ending inventory, Year 6 $ Dollar-value LIFO ending inventory, Year 7 $ Dollar-value LIFO ending inventory Year 8 $ 241,600✔ 232,800✔ 402,800 x 466 800 x

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Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.