On January 1, 2021, Badger Inc. adopted the dollar-value LIFO method. The inventory cost on this date was $100,600. The ending inventory, valued at year-end costs, and the relative cost index for each of the next three years is below:

Year-end	Ending inventory at year-end costs				Cost Index
2021	$	127,890				1.05
2022		145,640				1.10
2023		156,120				1.20

What inventory balance would Badger report on its 12/31/2023 balance sheet?

Multiple Choice

• $130,100.

• $131,990.

  Correct

• $156,120.

• None of these answer choices are correct.

Explanation

$156,120 1.20 = $130,100. This includes the first two layers, the first at $100,600 and the second at $21,200, plus another at $8,300 from 2022. No additional layer is added in 2023 because the inventory in base year terms actually decreased in 2023 from $132,400 in 2022 to $130,100 in 2023. To get the 12/31/2023 balance, the three remaining layers are multiplied by their relative price indexes, ($100,600 1.00) + ($21,200 1.05) + ($8,300 1.10).

Please show all work and steps confused on where the 8300 came from