On December 1, Discount Electronics has three DVD players left in stock. All are identical, all are
Question:
On December 1, Discount Electronics has three DVD players left in stock. All are identical, all are priced to sell at NT$4,500. One of the three DVD players left in stock, with serial #1012, was purchased on June 1 at a cost of NT$3,000. Another, with serial #1045, was purchased on November 1 for NT$2,760. The last player, serial #1056, was purchased on November 30 for NT$2,520.
Instructions
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, Discount Electronics’ year-end.
b. If Discount Electronics used the specifi c identifi cation 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 Discount’s cost of goods sold be if the company wished to minimize earnings? Maximize earnings?
c. Which of the two inventory methods do you recommend that Discount use? Explain why.
Step by Step Answer:
Financial Accounting with International Financial Reporting Standards
ISBN: 978-1119504306
4th edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso