【正确答案】 C

【答案解析】Total debt to total equity under LIFO is ($1800000+$1200000+$12500000)/($ 2000000+$10400000)=1.25. If Leeward uses FIFO, on the asset side, Inventory will increase by the amount of the ending LIFO reserve ($2100000). On the liabilities and equity side, Deferred Tax Liability will increase by the ending LIFO reserve times the tax rate ($ 2100000×0.4 )=$ 840000. Retained Earnings will increase by the ending LIFO reserve times (1-tax rate), which is ($2100000)×(1-0.4)=$1260000. Leeward's total debt to total equity ratio under FIFO will be ($1800000+$1200000+$ 840000+$12500000)/($ 2000000+$10400000+$1260000)=1.20.