The Happenings Company adopted the dollar-value LIFO inventory method on December 31, 2021, when the price index was 1.00. Ending inventory on the date that it adopted dollar-value LIFO follows.

Information related to the year-end prices for the two years after the adoption of dollar-value LIFO is summarized in the following table.

The cumulative price index for 2022 is 1.3385, and the cumulative price index for 2023 is 1.4399. Treat both models as one group.

Required

a. Calculate the ending inventory for 2022 at dollar-value LIFO and determine the LIFO reserve needed, if any. Prepare the journal entry to record the LIFO reserve.

b. Calculate the ending inventory for 2023 at dollar-value LIFO and determine the LIFO reserve needed, if any. Prepare the journal entry to record the LIFO reserve.

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Item MAS1840 JAS2307 TOTAL Number of Units 280 850 Total FIFO Cost $ 840 5,950 $6,790