On December 1, Quality 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, Quality Electronics’ year-end.
(b) If Quality 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 Quality’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 Quality use? Explain why.
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Related Book For
Accounting Tools for Business Decision Making
ISBN: 978-1118128169
5th edition
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso
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