
Given: S Corp., a household appliances dealer, purchases its inventories from various suppliers. S Corp. has consistently stated its inventories at FIFO cost.
Additional Information: Shawnee is considering alternate methods of accounting for the cash discounts it takes when paying its suppliers promptly. From a theoretical standpoint, discuss the acceptability of each of the following methods.
(a)
To discuss: The acceptability of financial income when payments are made.
(b)
To discuss: The acceptability of financial income when there is reduction of cost of goods sold for the period when payments are made.
(c)
To discuss: The acceptability of financial income when there is direct reduction of purchase cost.

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Chapter 8 Solutions
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