# Harlequin Co. has used the LIFO retail method since it began operations in early 2015 (its base year). Its beginning inventory for 2016 was \$36,000 at cost and \$72,000 at retail prices. At the end of 2016, it computed its estimated ending inventory at retail to be \$120,000. Assuming its cost-to-retail percentage for 2016 transactions was 60%, what is the inventory balance that.  Harlequin Co. would report in its 12/31/16 balance sheet?

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Harlequin Co. has used the LIFO retail method since it began operations in early 2015 (its base year). Its beginning inventory for 2016 was \$36,000 at cost and \$72,000 at retail prices. At the end of 2016, it computed its estimated ending inventory at retail to be \$120,000. Assuming its cost-to-retail percentage for 2016 transactions was 60%, what is the inventory balance that.  Harlequin Co. would report in its 12/31/16 balance sheet?

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Step 1

Formula for computing cost-to-retail ratio or percentage.

Step 2

Compute ending inventory that would report in its 12/31/16 balance sheet as shown below:

Step 3

Calculation formulas:...

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