Allied Merchandisers was organized on May 1. Macy Company is a major customer (buyer) of Allied (seller) products. May 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 3 per unit (for a total cost of $7,000). May 5 Allied sold 500 of the units in inventory for $11 per unit (invoice total: $5,500) to Macy Company under credit terms 2/10, n/60. The goods cost Allied $3,500. May Macy returns 50 units because they did not fit the customer's needs (invoice amount: $550). Allied restores the 7 units, which cost $350, to its inventory. May Macy discovers that 50 units are scuffed but are still of use and, therefore, keeps the units. Allied gives a price 8 reduction (allowance) and credits Macy's accounts receivable for $150 to compensate for the damage. May Allied receives payment from Macy for the amount owed on the May 5 purchase; payment is net of returns, 15 allowances, and any cash discount.

Allied Merchandisers was organized on May 1. Macy Company is a major customer (buyer) of Allied (seller) products. May 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 3 per unit (for a total cost of $7,000). May 5 Allied sold 500 of the units in inventory for $11 per unit (invoice total: $5,500) to Macy Company under credit terms 2/10, n/60. The goods cost Allied $3,500. May Macy returns 50 units because they did not fit the customer's needs (invoice amount: $550). Allied restores the 7 units, which cost $350, to its inventory. May Macy discovers that 50 units are scuffed but are still of use and, therefore, keeps the units. Allied gives a price 8 reduction (allowance) and credits Macy's accounts receivable for $150 to compensate for the damage. May Allied receives payment from Macy for the amount owed on the May 5 purchase; payment is net of returns, 15 allowances, and any cash discount.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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