You have been provided with the following information about Bibi’s inventory for January 2018. Bibi uses a period inventory system to sell her customized Swell water bottles

You have been provided with the following information about Bibi’s inventory for January 2018. Bibi uses a period inventory system to sell her customized Swell water bottles. While the water bottles come in different colours, she only sells one size so all her units are homogenous.

	Number of units	Cost per unit	Total cost	Price per unit sold	Total revenue
January 1–Beginning inventory	1,250	$25.00	$31,250
January 6–Purchase	750	$24.00	$18,000
January 20–Purchase	1,000	$27.00	$27,000
January 22–Purchase	1,125	$30.00	$33,750
Sales for January	4,000			$60	$240,000

How many water bottles (inventory) did Bibi’s have at the end of January?

What would be the value of Bibi’s ending inventory on January 31, 2018 if she used the FIFO cost formula?

What would be the value of Bibi’s ending inventory on January 31, 2018 if she used the weighted average cost formula?

Identify the third cost formula that is allowed under accounting standards. Explain when this formula is used, and why it would not likely be appropriate here.

Expert Solution

ekkarill92 answered 2 years ago

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