E6.4 (LO 2), AN On December 1, Kiyak Electronics Ltd. has three DVD players left in stock. All are identical, all are priced to sell at $150. One of the three DVD players left in stock, with serial #1012, was purchased on June 1 at a cost of $100. Another, with serial #1045, was purchased on November 1 for $88. The last player, serial #1056, was purchased on November 30 for $80. 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, Kiyak Electronics' year-end. b. If Kiyak 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 cus- tomers? What would Kiyak'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 Kiyak use? Explain why. Calculate cost of goods sold using specific identification and FIFO.

E6.4 (LO 2), AN On December 1, Kiyak Electronics Ltd. has three DVD players left in stock. All are identical, all are priced to sell at $150. One of the three DVD players left in stock, with serial #1012, was purchased on June 1 at a cost of $100. Another, with serial #1045, was purchased on November 1 for $88. The last player, serial #1056, was purchased on November 30 for $80. 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, Kiyak Electronics' year-end. b. If Kiyak 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 cus- tomers? What would Kiyak'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 Kiyak use? Explain why. Calculate cost of goods sold using specific identification and FIFO.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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E6-6 On December 1, Discount Electronics has three DVD players left in stock. All are identical and priced to sell at $750. Of the three DVD players left in stock, one with serial #1012 was pur- chased on June 1 at a cost of $500, another with serial #1045 was purchased on November 1 for $450. The last player, serial #1056, was purchased on November 30 for $400. 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 specific identification method instead of the FIFO method, how might it alter its income 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 max- imize income? What would Discount's cost of goods sold be if the company wished to mini- mize income? (c) Which inventory method do you recommend that…
On December 1, Kiyak Electronics Ltd. has three DVD players left in stock. All are identical, all are priced to sell at $150. One of the three DVD players left in stock, with serial #1012, was purchased on June 1 at a cost of $100. Another, with serial #1045, was purchased on November 1 for $88. The last player, serial #1056, was purchased on November 30 for $80. 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, Kiyak Electronics’ year-end. b. If Kiyak 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 Kiyak’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 Kiyak use? Explain why.
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