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How do we correctly (APA style) end a sentence that ends in a quote and requires a citation?

The manual explains it as, "a method for doing something (author, year)."

or

The manual explains it as, "a method for doing something." (author, year) Next sentence begins....

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Neither is correct. The citation goes outside the quote (it’s not something they said!) but within the period. You may also need to include a page number if the source has them:

If you are directly quoting from a work, you will need to include the author, year of publication, and page number for the reference (preceded by "p."). Introduce the quotation with a signal phrase that includes the author's last name followed by the date of publication in parentheses.

According to Jones (1998), "Students often had difficulty using APA style, especially when it was their first time" (p. 199).

If the author is not named in a signal phrase, place the author's last name, the year of publication, and the page number in parentheses after the quotation.

Purdue OWL — In-Text Citations: The Basics

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