Allied made its first and only purchase of inventory for the period on May 3 for 1,000 units at a price of $7 cash per unit (for a total cost of $7,000). Allied sold 500 of the units in inventory for $11 per unit (invoice total: $5,500) to Macy Co. under credit terms 2/10, n/60. Record the cost of goods sold. Macy returns 50 units because they did not fit the customer’s needs (invoice amount: $550). Allied restores the units, which cost $350, to its inventory. 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 $150 to compensate for the damage. Allied receives payment from Macy for the amount owed on the May 5 purchase; payment is net of returns, allowances, and any cash discount.
Allied made its first and only purchase of inventory for the period on May 3 for 1,000 units at a price of $7 cash per unit (for a total cost of $7,000).
Allied sold 500 of the units in inventory for $11 per unit (invoice total: $5,500) to Macy Co. under credit terms 2/10, n/60.
Record the cost of goods sold.
Macy returns 50 units because they did not fit the customer’s needs (invoice amount: $550).
Allied restores the units, which cost $350, to its inventory.
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
Allied receives payment from Macy for the amount owed on the May 5 purchase; payment is net of returns, allowances, and any cash discount.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
