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 see 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 $see, 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 Journal entries to record the following transactions for Allied assuming it uses a perpetual Inventory system and the gross method.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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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,eee units at a price of $18
cash per unit (for a total cost of $10,000).
May 5
Allied sold see 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 $588, 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 $388 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 3 4 5 6
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).
Note: Enter debits before credits.
Date
May 03
Record entry
General Journal
Clear entry
Debit
Credit
View general journal
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,eee units at a price of $18 cash per unit (for a total cost of $10,000). May 5 Allied sold see 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 $588, 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 $388 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 3 4 5 6 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). Note: Enter debits before credits. Date May 03 Record entry General Journal Clear entry Debit Credit View general journal
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