Allied Merchandisers was organized on May 1. Macy is a major Company 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 $9 cash per unit (for a total cost of $18,000). May 5 Allied sold 1.000

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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cost $900, 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
$500 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.
Transcribed Image Text:cost $900, 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 $500 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.
Allied Merchandisers was
organized
on May 1. Macy
is a major
Company
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 $9
cash per unit
(for a total cost
of $18,000).
May 5 Allied sold 1,000
of the units in
inventory for $13.
per unit (invoice
total: $13,000)
to Macy Company
under credit
terms 2/10, n/60.
The goods cost
Allied $9,000.
May 7 Macy returns 100
units because
they did not fit
the customer's
needs (invoice
amount: $1,300).
Allied restores
Transcribed Image Text:Allied Merchandisers was organized on May 1. Macy is a major Company 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 $9 cash per unit (for a total cost of $18,000). May 5 Allied sold 1,000 of the units in inventory for $13. per unit (invoice total: $13,000) to Macy Company under credit terms 2/10, n/60. The goods cost Allied $9,000. May 7 Macy returns 100 units because they did not fit the customer's needs (invoice amount: $1,300). Allied restores
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