To use the dollar-value LIFO retail method for inventory, the first step is to:
A)Determine the estimated ending inventory at current year retail prices.
B)Determine the estimated cost of goods sold for the current year.
C)Determine the cost-to-retail percentage for the current year transactions.
D)Price index adjust the LIFO inventory layers.

Question

Quizplus · Accepted Answer

The first step in using the dollar-value LIFO retail method is to determine the cost-to-retail percentage for the current year transactions. This percentage is used to convert the ending inventory at current year retail prices into ending inventory at cost. Only after this step can we calculate the estimated ending inventory at current year cost and the estimated cost of goods sold for the current year. Price index adjustment of LIFO inventory layers is a separate step and is not the first step in the process.

To Use the Dollar-Value LIFO Retail Method for Inventory, the First