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On January 1, 2020, Sheffield Wholesalers Inc. adopted the dollar-value LIFO inventory method for income...

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Accounting

On January 1, 2020, Sheffield Wholesalers Inc. adopted the dollar-value LIFO inventory method for income tax and external financial reporting purposes. However, Sheffield continued to use the FIFO inventory method for internal accounting and management purposes. In applying the LIFO method, Sheffield 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.

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1. Compute the internal conversion price indexes for 2020 and 2021

2. Compute the inventory amounts at December 31, 2020 and 2021, using the dollar-value LIFO inventory method

FIFO Basis per Records Unit Total Units Cost Cost Inventory, 1/1/20 Product A Product B 11,200 $30 10,080 25 $336,000 252,000 $588,000 Inventory, 12/31/20 Product A Product B 18,480 10,080 36 26 $665,280 262,080 $927,360 Inventory, 12/31/21 Product A Product B 40 14,560 11.200 32 $582,400 358,400 $940,800

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