Smith Company Uses the LIFO Retail Inventory Method for Inventory

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%