Rihanna Ltd is a new business that sells perfume bottles. The business had started operations with 100 bottles purchased for $40 each. During the first month of operation the following purchases were made:

1 July 2016 Purchased 300 bottles (invoice price = $38.00). The freight and insurance cost on the entire order was $1,800.

18 July 2016 Purchased 200 bottles from a different supplier whose normal retail price was $40.00 per unit. However, the supplier granted Rihanna Ltd a trade discount of 10% and offered free freight and insurance.

Sales of bottles for the month were as follows:

Units sold Selling price per unit

20 July 2016 100 $124

20 July 2016 100 $124

23 July 2016 100 $128

350

20 bottles from the purchase on the 18 July 2016 were found to have been left in the sun and have become discoloured. These bottles can only be sold for $20 each. A physical stocktake revealed 250 units on hand at the end of the period.

Rihanna Ltd uses the periodic inventory method and the first in first out (FIFO) cost-flow method.

Required:

Calculate the cost of closing inventory, in accordance with the requirements of relevant Australian accounting standards. Justify ALL elements of your calculations in accordance with Australian accounting standards