Prepare the appropriate journal entries for Macy Company to record each of the May transactions. Macy is a retailer that uses the gross method and a perpetual inventory system; it purchases these units for resale. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Prepare the appropriate journal entries for Macy Company to record each of the May transactions. Macy is a retailer that uses the gross method and a perpetual inventory system; it purchases these units for resale. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 $10 cash per unit (for a total cost of $10,000).
May 5
Allied sold 500 of the units in inventory for $14 per unit (invoice total: $7,000) to Macy Company
under credit terms 2/10, n/60. The goods cost Allied $5,000.
May 7
Macy returns 50 units because they did not fit the customer's needs (invoice amount: $700). Allied
restores the units, which cost $500, 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 $300 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 the appropriate journal entries for Macy Company to record each of the May transactions. Macy is a retailer that uses the
gross method and a perpetual inventory system; it purchases these units for resale. (If no entry is required for a transaction/event,
select "No journal entry required" in the first account field.)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ffca6a5ca-3bd9-4780-8bda-794fd6722f54%2F5d3d8c92-9981-4f48-8bd2-55c47d1233c0%2Fp447n8_processed.png&w=3840&q=75)
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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 $10 cash per unit (for a total cost of $10,000).
May 5
Allied sold 500 of the units in inventory for $14 per unit (invoice total: $7,000) to Macy Company
under credit terms 2/10, n/60. The goods cost Allied $5,000.
May 7
Macy returns 50 units because they did not fit the customer's needs (invoice amount: $700). Allied
restores the units, which cost $500, 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 $300 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 the appropriate journal entries for Macy Company to record each of the May transactions. Macy is a retailer that uses the
gross method and a perpetual inventory system; it purchases these units for resale. (If no entry is required for a transaction/event,
select "No journal entry required" in the first account field.)
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