RF Company had January 1 inventory of $300,000 when it adopted dollar-value LIFO. During the year, purchases were $1,800,000 and sales were $3,000,000. December 31 inventory at year-end prices was $430,080, and the price index was 112. What was RF Company's ending inventory?
a. $300,000.
b. $384,000.
c. $394,080.
d. $430,080.

To properly calculate this question, the price index was not 112 but 1.12. Using the correct price index, the answer is C. $394,080

Explanation:

To calculate the ending inventory of RF Company, we have to first calculate the inventory at year-end (December 31st) divided by the price index.

Second, we subtract the sales of the year from the inventory at year-end.

To calculate RF Company's ending inventory, we have;

Therefore, RF Company's ending inventory is $394,080

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