Allied Merchandisers was organized on May 1. Macy Co. 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 3,000 units at a price of $8 cash per unit (for a total cost of $24,000).

5 Allied sold 1,500 of the units in inventory for $12 per unit (invoice total: $18,000) to Macy Co. under credit terms 2/10, n/60. The goods cost Allied $12,000.

7 Macy returns 150 units because they did not fit the customers needs (invoice amount: $1,800). Allied restores the units, which cost $1,200, to its inventory.

8 Macy discovers that 150 units are scuffed but are still of use and, therefore, keeps the units. Allied sends Macy a credit memorandum for $600 toward the original invoice amount 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.

Exercise 4-5 Recording purchases, purchases returns, and purchases allowances LO P1

Prepare the appropriate journal entries for Macy Co. to record each of the May transactions. Macy is a retailer that uses the gross method and a perpetual inventory system, and purchases these units for resale. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

View transaction list Journal entry worksheet 1 2 345 Allied made its first and only purchase of inventory for the period on May 3 for 3,000 units at a price of $8 cash per unit (for a total cost of $24,000). Note: Enter debits before credits. Date General Journal Debit Credit May 03 Clear entry