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[The following information applies to the questions displayed below.) Allied Merchandisers was organized on May 1. Macy Company is a major customer (buyer) of Allied

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[The following information applies to the questions displayed below.) 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 $9 cash per unit (for a total cost of $18,000). May 5 Allied sold 1,080 of the units in inventory for $13 per unit (invoice total: $13,000) to Macy Company under credit terms 2/10, n/60. The goods cost Allied $9,000. May 7 Macy returns 100 units because they did not fit the customer's needs (invoice amount: $1,300). Allied restores the units, which cost $900, 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 $500 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 No Date Credit General Journal Debit > 1 May 03 18,000 Merchandise inventory Cash 18,000 2 May 05 13,000 Accounts receivable Sales 13,000 3 May 05 9,000 Cost of goods sold Merchandise inventory >> 9,000 4 May 07 1,300 Sales returns and allowances Accounts receivable >> 1,300 5 May 07 900 Sales returns and allowances Accounts receivable 900 6 May 08 500 Sales returns and allowances Accounts receivable 500 2 > 13,000 2 May 05 Accounts receivable Sales 13,000 9,000 3 May 05 Cost of goods sold Merchandise inventory 9,000 1,300 4 May 07 Sales returns and allowances Accounts receivable 1,300 900 5 May 07 Sales returns and allowances Accounts receivable 900 500 6 May 08 Sales returns and allowances Accounts receivable O 500 7 May 15 Cash Sales discounts Accounts receivable 11,484 % 216 X 11,700

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