Majestic Stores Incorporated, a large Canadian publicly traded electronics dealer, buys large quantities of a flat- screen LCD television model that costs $ 500 and sells for $ 990. The supplier provides a rebate of $ 25 per set if Majestic buys 200 or more sets during the calendar year. Between 1 February and 1 December 20X1, Majestic purchased 150 sets, which were recorded in inventory at $ 75,000 (150 × $ 500). By December 15, 130 of these units had been sold. On 15 December, Majestic ordered
50 more sets, FOB destination, for $ 500 each. Majestic received the sets on 22 December and promptly made a request for the rebate. Majestic sold an additional 40 sets by 31 January 20X2, the end of Majestic’s fiscal year. The rebate cheque arrived on 20 February, after Majestic’s accountants had closed the books. The supplier provides terms of 2/ 10, n/ 30. The supplier paid a total of $ 1,760 in freight charges, including $ 375 paid in January for the last order of 50 sets.

Required:
1. Calculate the ending inventory value at 31 January 20X2. Majestic uses FIFO.
2. What entry should be made relative to the rebate on 31 January 20X2? Why?
3. What entry would be made on 20 February 20X2?