[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 $10 cash per unit (for a total cost of $20,000). May 5 Allied sold 1,000 of the units in inventory for $14 per unit (invoice total: $14,000) to Macy Company under credit terms 2/10, n/60. The goods cost Allied $10,000. May 7 Macy returns 100 units because they did not fit the customer's needs (invoice amount: $1,400). Allied restores the units, which cost $1,000, 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 $600 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 the appropriate journal entries for Macy Company to record each of the May transactions. Macy is a retailer that uses the gross method and a perpetual inventory system; it purchases these units for resale. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Use the above informations, analyze each transaction by indicating its effects on the income statement-specifically, identify the accounts and amounts (including + or -) for each transaction. Answer is not complete. May 3 May 5 May 7 Income Statement Components Increase or Increase or Amount Amount Decrease Decrease Increase or Decrease Amount Sales (+) increase Sales discounts Sales returns and allowances Net sales Cost of goods sold Gross profit (+) increase (+) increase (-) decrease (+) increase (-) decrease (+) increase (-) decrease te. Increase or Decrease May 8 (+) increase May 15 Increase or Amount Amount Decrease (+) increase (-) decrease (-) decrease (-) decrease (-) decrease Prepare journal entries to record the following transactions for Allied assuming it uses a perpetual inventory system and the gross method. 1 No Answer is not complete. Date May 03 General Journal Debit Credit Merchandise inventory 20,000 Cash 20,000 2 May 05 Accounts receivable Sales 3 May 05 Cost of goods sold Merchandise inventory 14,000 14,000 10,000 10,000 4 May 07 Sales returns and allowances 1,400 Accounts receivable 1,400 5 May 07 Merchandise inventory Cost of goods sold 1,000 1,000 5 May 07 6 May 08 Accounts receivable Merchandise inventory Cost of goods sold Sales returns and allowances Accounts receivable 7 May 15 Cash Sales discounts Accounts receivable 1,000 1,400 1,000 600 600 18,571 x