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 3,000 units at a price of $10 cash per unit (for a total cost of $30,000). May 5 Allied sold 1,500 of the units in inventory for $14 per unit (invoice total: $21,eee) to Macy Company under credit terms 2/10, n/6e. The goods cost Allied $15,000. May 7 Macy returns 150 units because they did not fit the customer's needs (invoice amount: $2,100). Allied. restores the units, which cost $1,500, 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 $900 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. Use the above informations, analyze each transaction by indicating its effects on the income statement-specifically, identify the accounts and amounts (including + or -) for each transaction. Income Statement Components Sales Sales discounts Sales returns and allowances Net sales Cost of goods sold Gross profit May 3 May 5 Increase Decrease Amount Increase Decrease Amount May 7 Increase/Decrease 4 Amount May 8 Increase/Decrease Amos
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 3,000 units at a price of $10 cash per unit (for a total cost of $30,000). May 5 Allied sold 1,500 of the units in inventory for $14 per unit (invoice total: $21,eee) to Macy Company under credit terms 2/10, n/6e. The goods cost Allied $15,000. May 7 Macy returns 150 units because they did not fit the customer's needs (invoice amount: $2,100). Allied. restores the units, which cost $1,500, 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 $900 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. Use the above informations, analyze each transaction by indicating its effects on the income statement-specifically, identify the accounts and amounts (including + or -) for each transaction. Income Statement Components Sales Sales discounts Sales returns and allowances Net sales Cost of goods sold Gross profit May 3 May 5 Increase Decrease Amount Increase Decrease Amount May 7 Increase/Decrease 4 Amount May 8 Increase/Decrease Amos
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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please answer and explain everything in detail answer in text
![Required information i
[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 3,000 units at a
price of $10 cash per unit (for a total cost of $30,000).
May 5 Allied sold 1,500 of the units in inventory for $14 per unit (invoice total: $21,000) to Macy Company
under credit terms 2/10, n/60. The goods cost Allied $15,000.
May 7
Macy returns 150 units because they did not fit the customer's needs (invoice amount: $2,100). Allied
restores the units, which cost $1,500, 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 $900 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.
Use the above informations, analyze each transaction by indicating its effects on the income statement-specifically, identify the
accounts and amounts (including+ or -) for each transaction.
Income Statement Components
Sales
Sales discounts
Sales returns and allowances
Net sales
Cost of goods sold
Gross prof
May 3
Increase/Decrease
Amount
May 5
Amount
Increase Decrease
May 7
Increase/Decrease
4
Amount
May
Increase/Decrease
Amos](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa7cbbd39-e240-400c-aa00-3c97351af073%2Fd74247af-a9ea-44da-80a1-d1fa8b6b42cc%2Fhjs7rkf_processed.png&w=3840&q=75)
Transcribed Image Text:Required information i
[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 3,000 units at a
price of $10 cash per unit (for a total cost of $30,000).
May 5 Allied sold 1,500 of the units in inventory for $14 per unit (invoice total: $21,000) to Macy Company
under credit terms 2/10, n/60. The goods cost Allied $15,000.
May 7
Macy returns 150 units because they did not fit the customer's needs (invoice amount: $2,100). Allied
restores the units, which cost $1,500, 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 $900 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.
Use the above informations, analyze each transaction by indicating its effects on the income statement-specifically, identify the
accounts and amounts (including+ or -) for each transaction.
Income Statement Components
Sales
Sales discounts
Sales returns and allowances
Net sales
Cost of goods sold
Gross prof
May 3
Increase/Decrease
Amount
May 5
Amount
Increase Decrease
May 7
Increase/Decrease
4
Amount
May
Increase/Decrease
Amos
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