
Concept explainers
(a)
Periodic Inventory System: It is a system in which the inventory is updated in the accounting records on a periodic basis such as at the end of each month, quarter or year. In other words, it is an accounting method which is used to determine the amount of inventory at the end of each accounting period.
FIFO: In First-in-First-Out method, items purchased initially are sold first. So, the value of the ending inventory consists the recent cost for the remaining unsold items.
Specific identification method: Specific identification method refers to accurately identifying the items that are being sold and stored as ending inventory with its purchase price. It requires the companies to keep perfect records of the original cost of each and every individual items of the inventory.
To calculate: The cost of goods sold using the FIFO periodic inventory method of Q Electronics.
(b)
To calculate: The cost of goods sold using specific identification method of Q Electronics.
(c)
To explain: Whether the FIFO method or specific identification method would be recommended for Q Electronics.

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Chapter 6 Solutions
Financial Accounting
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