On December 1, Quality Electronics has three DVD players left in stock. All are

Question

On December 1, Quality Electronics has three DVD players left in stock. All are identical, all are priced to sell at $104. One of the three DVD players left in stock, with serial #1012, was purchased on June 1 at a cost of $64. Another, with serial #1045, was purchased on November 1 for $59. The last player, serial #1056, was purchased on November 30 for $49. 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. 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? Cost of goods sold would be $ if it wished to minimise the earnings. Cost of goods sold would be $ if it wished to maximise the earnings.

Explanation / Answer

1-Jun serial # 1012 64 1-Nov serial # 1045 59 30-Nov serial # 1056 49 Cost of goods sold - FIFO 1-Jun serial # 1012 64 1-Nov serial # 1045 59 123 Specific identification method If it wishes to minimise earnings , then it should choose to sell the DVD player with higher value ie purchase of June 1 and Nov 1 would give a higher COGS and would minimise earnings If it wishes to maximise earnings , then it shpould choose to sell DVD player with a lower cost , ie purrchase of Nov 30 and Nov 1 would give a lower COGS nad a higher earning

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