Tim Baker has found a supplier of rebuilt engines for Get Your Motor Runnin’. Ge
ID: 2454548 • Letter: T
Question
Tim Baker has found a supplier of rebuilt engines for Get Your Motor Runnin’. Get Your Motor Runnin’ uses a perpetual inventory system.
1. Using the journal provided, record the following transactions. Assume that Get Your Motor Runnin’ is using the FIFO method.
June 1 Purchased 5 rebuilt engines from Good As New Company for $750 each. Invoice terms are n/30.
June 5 Replaced the engine on a motorcycle for a customer. Charged the customer $1,000 for the rebuilt engine and $250 in labor. Customer paid in cash.
June 10 Purchased 10 rebuilt engines from Good as New for $800 each. Invoice terms are n/30.
June 15 Replaced the engines on 10 motorcycles for the town’s police department. Charged $1,250 each for the rebuilt engines and $2,500 for labor. Sent an invoice to the police department.
June 20 Sold a rebuilt engine to a customer for $1,250 cash.
GENERAL JOURNAL
Page: 4
Date
Account and Explanation
Post. Ref.
Debit
Credit
The owner of Get Your Motor Runnin’, Tim Baker, wants to understand the inventory accounting process. Write a brief explanation of how inventory costs flow through his company.
GENERAL JOURNAL
Page: 4
Date
Account and Explanation
Post. Ref.
Debit
Credit
Explanation / Answer
Tim Baker has found a supplier of rebuilt engines for Get Your Motor Runnin’. Ge