Craig's Snowboards Uses the Perpetual Inventory System and the Gross

question 34

Essay

Craig's Snowboards uses the perpetual inventory system and the gross method of accounting for sales,and had the following sales transactions during June:
$\begin{array}{|l|l|}\hline \text {June 2 } & \begin{array}{l}\text { Sold merchandise to General Sports Store on credit for } \$ 4,800 \text {, terms } 1 / 15, \\\text { n }/ 60 . \text { The items sold had a cost of } \$ 2,700 .\end{array} \\\hline & \text { General Sports Store returned merchandise that had a selling price of } \\\text { June 4 } & \$ 200 . \text { The cost of the merchandise returned was } \$ 110 . \\\hline \text { June 13 } & \begin{array}{l}\text { General Sports Store paid for the merchandise sold on June } 2 \text { less the } \\\text { return, taking any appropriate discount earned. }\end{array} \\\hline\end{array}$

Prepare the journal entries that Craig's Snowboards must make to record these transactions.

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Definitions:

FIFO

An inventory valuation method which assumes that the first goods purchased or produced are also the first ones sold, also known as "First In, First Out."

Ending Inventory

The worth of products ready for purchase at the close of a financial period.

Cost Flow Assumption

The method used by businesses to value inventory and calculate the cost of goods sold, based on the order in which products are bought or produced.

FIFO

"First In, First Out," an inventory valuation method where the oldest stock is sold first.