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.
To Calculate: The cost of goods sold using the FIFO periodic inventory method of P Electronics.
(b)
Specific identification method refer to accurately identifying the items that are being sold and stored as ending inventory with its purchase. 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 specific identification method of P Electronics.
(c)
To Explain: Whether the FIFO method or specific identification method would be recommended for P Electronics.
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