Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Prepare journal entries to record the following transactions for Allied assuming it uses a perpetual inventory system and the gross method. Allied Merchandisers was organized
Prepare journal entries to record the following transactions for Allied assuming it uses a perpetual inventory system and the gross method.
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 $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 Company under credit terms 2/10, n/60. The goods cost Allied $15,000. |
May 7 | Macy returns 125 units because they did not fit the customers 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. |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started