Question
Allied Merchandisers was organized on May 1. Macy Company is a major customer (buyer) of Allied (seller) products. May 3 Allied made its first
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 $12 cash per unit (for a total cost of $24,000). May 5 Allied sold 1,000 of the units in inventory for $16 per unit (invoice total: $16,000) to Macy Company under credit terms 2/10, n/60. The goods cost Allied $12,000. May 7 Macy returns 100 units because they did not fit the customer's needs (invoice amount: $1,600). Allied restores the units, which cost $1,200, to its inventory. May 8 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 $800 to compensate for the damage. May 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. Prepare journal entries to record the following transactions for Allied assuming it uses a perpetual inventory system and the gross method. View transaction list View journal entry worksheet No Date General Journal 1 May 03 Merchandise inventory Cash i 2 May 05 Accounts receivable Sales Debit Credit 24,000 24,000 16,000 16,000 3 May 05 Cost of goods sold 16,000 Merchandise inventory 16,000 ........
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