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 towns 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.