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

Allied Merchandisers was organized on May 1. Macy Co. is a major customer (buyer) of Allied (seller) products. Prepare journal entries to
record the following transactions for Allied assuming it uses a perpetual inventory system and the gross method.
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 $10 cash per unit
(for a total cost of $20,000).
5 Allied sold 1,500 of the units in inventory for $14 per unit (invoice total: $21,000) to Macy Co. under credit terms 210, n60.
The goods cost Allied $15,000.
7 Macy returns 125 units because they did not fit the customer's needs (invoice amount: $1,750). Allied restores the units,
which cost $1,250, to its inventory.
8 Macy discovers that 200 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 $300 to compensate for the damage.
15 Allied receives payment from Macy for the amount owed on the May 5 purchase; payment is net of returns, allowances, and
any cash discount.
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