Use the following information for questions 125 through 129.
Plank Co. uses the retail inventory method. The following information is available for the current year.
-If the ending inventory is to be valued at approximately LIFO cost, the calculation of the cost ratio should be based on cost and retail amounts of
A) $1,134,000 and $1,656,000.
B) $1,134,000 and $1,596,000.
C) $900,000 and $1,230,000.
D) $900,000 and $1,290,000.

Question

Use the following information for questions 125 through 129.
Plank Co. uses the retail inventory method. The following information is available for the current year. 
-If the ending inventory is to be valued at approximately LIFO cost, the calculation of the cost ratio should be based on cost and retail amounts of
A) $1,134,000 and $1,656,000. 
B) $1,134,000 and $1,596,000. 
C) $900,000 and $1,230,000. 
D) $900,000 and $1,290,000.

Quizplus · Accepted Answer

The cost ratio for LIFO (Last-In, First-Out) should reflect the most recent costs. The given options don't provide specific context about the dates or periods these amounts relate to, but typically, the lower cost and retail amounts ($900,000 and $1,230,000) would more closely approximate the costs and retail values at the end of the period, assuming prices are rising, which is a common scenario for businesses. This makes option C the most likely choice for approximating LIFO cost, as it would use the most recent (and thus lower) set of values to calculate the cost ratio.

Use the Following Information for Questions 125 Through 129