The first step, when using dollar-value LIFO retail method for inventory, 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 calculated by dividing the cost of goods sold by the retail price of goods sold. Once this percentage is determined, it is used to convert the ending inventory at retail prices to a dollar-value LIFO inventory. Therefore, the correct choice is C.

The First Step, When Using Dollar-Value LIFO Retail Method for Inventory