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.
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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
![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 journal entries to record the following transactions for Allied assuming it uses a perpetual inventory system and the gross
method.
View transaction list
View journal entry worksheet
No
Date
General Journal
1
May 03
Merchandise inventory
Cash
2
May 05
Accounts receivable
Debit
Credit
10,000
7,000
10,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc63a8c31-c0c6-4a56-bdc7-f44a7ccea4b3%2Fe1fb88c3-f444-4f2d-8fc9-f0d7628dece3%2Fkrtj6wg_processed.jpeg&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 $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 journal entries to record the following transactions for Allied assuming it uses a perpetual inventory system and the gross
method.
View transaction list
View journal entry worksheet
No
Date
General Journal
1
May 03
Merchandise inventory
Cash
2
May 05
Accounts receivable
Debit
Credit
10,000
7,000
10,000
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