Smith Company Uses the LIFO Retail Inventory Method for Inventory

question 134

Multiple Choice

Smith Company uses the LIFO retail inventory method for inventory costing.Smith Company has beginning inventory with a cost of $20,000 and a retail value of $40,000.During the year,the company purchases goods with a cost basis of $80,000 and a retail basis of $100,000.Sales are $60,000 at retail.Net markups are $5,000 and net markdowns are $5,000.Under the LIFO retail inventory method,which cost-to-retail ratios are used to determine the cost of ending inventory?

• A)beginning inventory 50%; new layer 80%
• B)beginning inventory 50%; new layer 71.4%
• C)beginning inventory 50%; new layer 50%
• D)beginning inventory 50%; new layer 76.2%

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