#$6$ CH$5$

Part $3$ of $3$

Required information

$[$The following information applies to the questions displayed below.$]$

Allied Merchandisers was organized on May $1.$ Macy Company is a major customer $($buyer$)$ of Allied $($seller$)$ products.

May $3$ Allied made its first and only purchase of inventory for the period on May $3$ for $2,000$ units at a

price of $$9$ cash per unit $($for a total cost of $$18,000).$

Allied sold $1,000$ of the units in inventory for $$13$ per unit $($invoice total: $$13,000)$ to Macy Company

under credit terms $\frac{2}{10},\frac{n}{60}.$ The goods cost Allied $$9,000.$

Macy returns $100$ units because they did not fit the customer's needs $($invoice amount: $$1,300).$ Allied

restores the units, which cost $$900,$ to its inventory.

Macy discovers that $100$ units are scuffed but are still of use and, therefore, keeps the units.

Allied gives a price reduction $($allowance$)$ and credits Macy's accounts receivable for $$500$ to

compensate for the damage.

Allied receives payment from Macy for the amount owed on the May $5$ purchase; payment is net of

returns, allowances, and any cash discount.

Use the above informations, analyze each transaction by indicating its effects on the income statement$-$specifically, identify the accounts and amounts $($including $+$ or $-)$ for each transaction.

$\backslash$table$[[$Income Statement Components,May $3,$May $5,$May $7,$May $8,$May $15],[\backslash$table$[[$Increase or$],[$Decrease$]],$Amount,$\backslash$table$[[$Increase or$],[$Decrease$]],$Amount,$\backslash$table$[[$Increase or$],[$Decrease$]],$Amount,$\backslash$table$[[$Increase or$],[$Decrease$]],$Amount,$\backslash$table$[[$Increase or$],[$Decrease$]],$Amount$],[$Sales$,,,,,,,,,,],[$Sales discounts,,,,,,,,,,$],[$Sales returns and allowances,,,,,,,,,,$],[$Net sales,,,,,,,,,,$],[$Cost of goods sold,,,,,,,,,,$],[$Gross profit,,,,,,,,,,$]]$