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On January 1, 2017, Flounder Wholesalers Inc. adopted the dollar-value LIFO inventory method for income...

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Accounting

On January 1, 2017, Flounder Wholesalers Inc. adopted the dollar-value LIFO inventory method for income tax and external financial reporting purposes. However, Flounder continued to use the FIFO inventory method for internal accounting and management purposes. In applying the LIFO method, Flounder uses internal conversion price indexes and the multiple pools approach under which substantially identical inventory items are grouped into LIFO inventory pools. The following data were available for inventory pool no. 1, which comprises products A and B, for the 2 years following the adoption of LIFO.

units unit cost total cost
inventory, 1/1/17
product A 12,400 $53 $657,200
product B 11,400 44 501,000
$1,158,000
inventory, 12/31/17
product A 19,400 64 $1,241,600
product B 11,400 46 524,000
$1,766,000
inventory, 12/31/18
Product A 15,400 71 $1,093,400
product B 12,400 57 706,800
$1,800,200

a.) compute the internal conversion price indexes for 2017 and 2018.

b.) compute the inventory amounts at December 31, 2017 and December 31, 2018, using the dollar value LIFO inventory method.

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