Chapter 5- Accounting for Merchandising Operations 1. 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 Macy Co. 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). May 5- Allied sold 1,500 of the units in inventory for $14 per unit (invoice total: $21,000) to Macy Co. under credit terms 2/10, n/60. The goods cost $15,000 to Allied. May 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. May 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. 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. 2. Santa Fe Retailing purchased merchandise "as is" (with no returns) from Mesa Wholesalers with credit terms of 3/10, n/60 and an invoice price of $40,000. The merchandise had cost Mesa $22,000. Assume that both buyer and seller use a perpetual inventory system and the gross method. a. Prepare entries that the buyer records for the (a) purchase, (b) cash payment within the discount period, and (c) cash payment after the discount period. b. Prepare entries that the seller records for the (a) sale, (b) cash collection within the discount period, and (c) cash collection after the discount period.

Chapter 5 -Accounting for Merchandising Operations 1. 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 Macy Co. 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 ). May 5- Allied sold 1,500 of the units in inventory for $14 per unit (invoice total: $21,000 ) to Macy Co. under credit terms 2/10,n/60. The goods cost $15,000 to Allied. May 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. May 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. 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. 2. Santa Fe Retailing purchased merchandise "as is" (with no returns) from Mesa Wholesalers with credit terms of 3/10,n/60 and an invoice price of $40,000. The merchandise had cost Mesa $22,000. Assume that both buyer and seller use a perpetual inventory system and the gross method. a. Prepare entries that the buyer records for the (a) purchase, (b) cash payment within the discount period, and (c) cash payment after the discount period. b. Prepare entries that the seller records for the (a) sale, (b) cash collection within the discount period, and (c) cash collection after the discount period. Chapter 5 -Accounting for Merchandising Operations 1. 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 Macy Co. 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 ). May 5- Allied sold 1,500 of the units in inventory for $14 per unit (invoice total: $21,000 ) to Macy Co. under credit terms 2/10,n/60. The goods cost $15,000 to Allied. May 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. May 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. 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. 2. Santa Fe Retailing purchased merchandise "as is" (with no returns) from Mesa Wholesalers with credit terms of 3/10,n/60 and an invoice price of $40,000. The merchandise had cost Mesa $22,000. Assume that both buyer and seller use a perpetual inventory system and the gross method. a. Prepare entries that the buyer records for the (a) purchase, (b) cash payment within the discount period, and (c) cash payment after the discount period. b. Prepare entries that the seller records for the (a) sale, (b) cash collection within the discount period, and (c) cash collection after the discount period