On December 1, LoPrice Electronics has three DVD players left in stock. All are identical, all are
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(a) Calculate the cost of goods sold using the FIFO periodic inventory method, assuming that two of the three players were sold by the end of December, LoPrice Electronics’ year-end.
(b) If LoPrice Electronics used the specific identification method instead of the FIFO method, how might it alter its earnings by “selectively choosing” which particular players to sell to the two customers? What would LoPrice’s cost of goods sold be if the company wished to minimize earnings? Maximize earnings?
(c) Which inventory method, FIFO or specific identification, do you recommend that Lo Price use? Explain why.
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Related Book For
Financial Accounting Tools for business decision making
ISBN: 978-0470534779
6th Edition
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso
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