Use the information below to answer the next four questions.

Purple Company uses a perpetual inventory system. The company's beginning inventory of a particular product and its purchases during the month of January were as follows:

	Quantity	Unit Cost	Total Cost
Beginning inventory, Jan 1	16	$10	$160
Purchase, Jan 11	14	$12	$168
Purchase, Jan 20	23	$15	$345
Totals	53		$673

On January 25, Purple Company sold 25 units of this product The other 28 units remained in inventory at January 31.

Determine the Cost of Goods Sold for the month of January using the LIFO cost flow assumption.

Determine the Inventory balance on January 31 assuming the company uses FIFO to allocate inventory costs.

Prepare the adjusting entry needed if a physical count of inventory on January 31 reveals that there are only 26 items remaining in inventory and Purple uses the FIFO cost flow assumption.

Considering current replacement costs, what inventory costing method would you recommend that Purple use in order the show the most realistic balance sheet value for inventory at January 31?

Group of answer choices

Specific identification

Average cost

FIFO

LIFO