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 $12 cash per unit (for a total cost of $12,000). May 5 Allied sold 500 of the units in inventory for $16 per unit (invoice total: $8,000) to Macy Company under credit terms 2/10, n/60. The goods cost Allied $6,000. May 7 Macy returns 50 units because they did not fit the customer's needs (invoice amount: $800). Allied restores the units, which cost $600, 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 $400 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.
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 $12 cash per unit (for a total cost of $12,000). May 5 Allied sold 500 of the units in inventory for $16 per unit (invoice total: $8,000) to Macy Company under credit terms 2/10, n/60. The goods cost Allied $6,000. May 7 Macy returns 50 units because they did not fit the customer's needs (invoice amount: $800). Allied restores the units, which cost $600, 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 $400 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 $12 cash per unit (for a total cost of $12,000).
May 5
Allied sold 500 of the units in inventory for $16 per unit (invoice total: $8,000) to Macy Company
under credit terms 2/10, n/60. The goods cost Allied $6,000.
May 7
Macy returns 50 units because they did not fit the customer's needs (invoice amount: $800). Allied
restores the units, which cost $600, 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 $400 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.
View transaction list
Journal entry worksheet
1
2
Date
May 03
3
Note: Enter debits before credits.
Record entry
4
5
Allied made its first and only purchase of inventory for the period on May 3 for
1,000 units at a price of $12 cash per unit (for a total cost of $12,000).
General Journal
6
Clear entry
7
Debit
Credit
View general Journal](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fed878647-3d23-4933-b6d3-3dc99a9f0ae9%2F2ed19078-61dd-4cb2-9bed-104b548da598%2Fcihylmby7_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Required information
[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 1,000 units at a
price of $12 cash per unit (for a total cost of $12,000).
May 5
Allied sold 500 of the units in inventory for $16 per unit (invoice total: $8,000) to Macy Company
under credit terms 2/10, n/60. The goods cost Allied $6,000.
May 7
Macy returns 50 units because they did not fit the customer's needs (invoice amount: $800). Allied
restores the units, which cost $600, 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 $400 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.
View transaction list
Journal entry worksheet
1
2
Date
May 03
3
Note: Enter debits before credits.
Record entry
4
5
Allied made its first and only purchase of inventory for the period on May 3 for
1,000 units at a price of $12 cash per unit (for a total cost of $12,000).
General Journal
6
Clear entry
7
Debit
Credit
View general Journal
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