E6-6 On December 1, Discount Electronics has three DVD players left in stock. All are identicaland 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 thattwo 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 thetwo 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 Discount use? Explain why.

The company calculates the cost of goods sold by adding the opening inventory and purchases and…

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.

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.

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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On May 10, Hudson Computing sold 90 Millennium laptop computers to Apex Publishers. At the date of this sale, Hudson’s perpetual inventory records included the following cost layers for the Millennium laptops. Purchase Date Quantity Unit Cost Total Cost Apr. 9 70 $ 1,500 $ 105,000 May 1 30 $ 1,600 48,000 Total on hand 100 $ 153,000 Prepare journal entries to record the cost of the 90 Millennium laptops sold on May 10, assuming that Hudson Computing uses the following. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) a. Specific identification method (62 of the units sold were purchased on April 9, and the remaining units were purchased on May 1). b. Average-cost method. c. FIFO method. d. LIFO method
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