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 $7 cash per unit (for a total cost of $7,000). May 5 Allied sold 500 of the units in inventory for $11 per unit (invoice total: $5,500) to Macy Company under credit terms 2/10, n/60. The goods cost Allied $3,500. May 7 Macy returns 50 units because they did not fit the customer's needs (invoice amount: $550). Allied restores the units, which cost $350, to its inventory. May 8 Macy discovers that 50 units are scuffed but are still of use and, therefore, keeps the units. Allie gives a price reduction (allowance) and credits Macy's accounts receivable for $150 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.
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 $7 cash per unit (for a total cost of $7,000). May 5 Allied sold 500 of the units in inventory for $11 per unit (invoice total: $5,500) to Macy Company under credit terms 2/10, n/60. The goods cost Allied $3,500. May 7 Macy returns 50 units because they did not fit the customer's needs (invoice amount: $550). Allied restores the units, which cost $350, to its inventory. May 8 Macy discovers that 50 units are scuffed but are still of use and, therefore, keeps the units. Allie gives a price reduction (allowance) and credits Macy's accounts receivable for $150 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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please help with full explanation
Transcribed Image Text: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 8
Increase or
Decrease
Amount
May 3
Increase or
Decrease
Amount
May 15
Increase or
Decrease
May 5
Increase or
Decrease
Amount
Amount
May 7
Increase or
Decrease
Amount
![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 $7 cash per unit (for a total cost of $7,000).
May 5 Allied sold 500 of the units in inventory for $11 per unit (invoice total: $5,500) to Macy Company
under credit terms 2/10, n/60. The goods cost Allied $3,500.
May 7 Macy returns 50 units because they did not fit the customer's needs (invoice amount: $550). Allied
restores the units, which cost $350, 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 $150 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.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff267d921-7e78-4449-ada4-792e90b484ea%2F6b9afd65-249f-47a5-ae49-23254d607922%2F8mgp1b9_processed.png&w=3840&q=75)
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 1,000 units at a
price of $7 cash per unit (for a total cost of $7,000).
May 5 Allied sold 500 of the units in inventory for $11 per unit (invoice total: $5,500) to Macy Company
under credit terms 2/10, n/60. The goods cost Allied $3,500.
May 7 Macy returns 50 units because they did not fit the customer's needs (invoice amount: $550). Allied
restores the units, which cost $350, 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 $150 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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