Fabulous Fays is a boutique clothing store in San Diego, California. Fays uses a perpetual inventory system. In March, Fays purchased a type of swimwear designed to be slimming to the wearer. The company purchased twenty suits of varying sizes for $40 each and priced them at $120 each. They sold out almost immediately, so Fay purchased forty more suits in April for $40 each and sold thirty-eight of them for $130 each. Again in July, Fay made one more purchase of twenty suits at $40 each and sold fifteen of them for $130 each. Fay decided not to put the rest of this inventory on sale at the end of the summer, but to hold onto the items until cruise season started the following winter. She believed she could sell the remainder of this merchandise without having to mark the items down.

a. Make the journal entries for the purchases Fay made.

b. Make the journal entries for the sales Fay made.

c. Determine the balance in ending inventory on December 31.

d. Fay performed a physical count on December 31 and determined that three of the swimsuits had been severely damaged due to a leaky pipe. They had to be thrown away. Make the journal entry to show the loss of this inventory.