Use the above informations, analyze each transaction by indicating its effects on the income statementspecifically, identify the accounts and amounts (including + or -) for each transaction.

Income Statement Components	May 3	May 5	May 7	May 8	May 15
Increase/Decrease	Amount	Increase/Decrease	Amount	Increase/Decrease	Amount	Increase/Decrease	Amount	Increase/Decrease	Amount
Sales
Sales discounts
Sales returns and allowances
Net sales
Cost of goods sold
Gross profit

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 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.