Journal Entries Allied Merchandisers was organized on May 1. Macy Company is a major customer (buyer) of Allied (seller) products. May 3Allied made its first and only purchase of inventory for the period on May 3 for 3,000 units at a price of $8 cash per unit (for a total cost of $24,000).May 5Allied sold 1,500 of the units in inventory for $12 per unit (invoice total: $18,000) to Macy Company under credit terms 2/10, n/60. The goods cost Allied $12,000.May 7Macy returns 150 units because they did not fit the customer’s needs (invoice amount: $1,800). Allied restores the units, which cost $1,200, to its inventory.May 8Macy discovers that 150 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 $600 to compensate for the damage.May 15Allied receives payment from Macy for the amount owed on the May 5 purchase; payment is net of returns, allowances, and any cash discount.

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Description: Journal Entries Allied Merchandisers was organized on May 1. Macy Company is a major customer (buyer) of Allied (seller) products. May 3Allied made its first and only purchase of inventory for the period on May 3 for 3,000 units at a price of $8 cas

Introduction: A journal entry is frequently used in an income statement to document a business…

Answered: Journal Entries Allied Merchandisers…

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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Journal Entries

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 3,000 units at a price of $8 cash per unit (for a total cost of $24,000).
May 5	Allied sold 1,500 of the units in inventory for $12 per unit (invoice total: $18,000) to Macy Company under credit terms 2/10, n/60. The goods cost Allied $12,000.
May 7	Macy returns 150 units because they did not fit the customer’s needs (invoice amount: $1,800). Allied restores the units, which cost $1,200, to its inventory.
May 8	Macy discovers that 150 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 $600 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.

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