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Required information

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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 $1,000$ units at a price of $$8$

cash per unit $($for a total cost of $$8,000).$

May $5$ Allied sold $500$ of the units in inventory for $$12$ per unit $($invoice total: $$6,000)$ to Macy Company under credit

terms $\frac{2}{10},\frac{n}{60}.$ The goods cost Allied $$4,000.$

May $7$ Macy returns $50$ units because they did not fit the customer's needs $($invoice amount: $$600).$ Allied restores the

units, which cost $$400,$ to its inventory.

May $8$ Macy discovers that $50$ 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 $$200$ 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.

Journal entry worksheet

Note: Enter debits before credits.