Harlequin Co. adopted the dollar-value LIFO retail method at the beginning of 2018 (its base year). Its beginning inventory for 2018 was $36,000 at cost and $72,000 at retail prices. At the end of 2018, it computed its estimated ending inventory at retail to be $110,000. Assuming its cost-to-retail percentage for 2018 transactions was 60%, and that the retail price index at the end of 2018 was 1.10, what is the inventory balance that Harlequin Co. would report in its 12/31/2018 balance sheet?
A) $66,000.
B) $54,480.
C) $110,000.
D) $60,000.

Question

Quizplus · Accepted Answer

$110,000 ÷ 1.10 = $100,000. $100,000 ? 72,000 = $28,000 × 1.10 = 30,800 × 60% = $18,480 (2018 layer) + $36,000 (beginning inventory) = $54,480