[The following information applies to the questions displayed below.] Allied Merchandisers was organized on May 1. Macy Co. 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 2,000 units at a price of $7 cash per unit (for a total cost of $14,000). 5 Allied sold 1,000 of the units in inventory for $11 per unit (invoice total: $11,000) to Macy Co. under credit terms 2/10, n/60. The goods cost Allied $7,000. 7 Macy returns 100 units because they did not fit the customer's needs (invoice amount: $1,100). Allied restores the units, which cost $700, to its inventory. 8 Macy discovers that 100 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. 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.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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**Required Information**

*The following information applies to the questions displayed below.*

Allied Merchandisers was organized on May 1. Macy Co. 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 2,000 units at a price of $7 cash per unit (for a total cost of $14,000).
  
- **May 5**: Allied sold 1,000 of the units in inventory for $11 per unit (invoice total: $11,000) to Macy Co. under credit terms 2/10, n/60. The goods cost Allied $7,000.

- **May 7**: Macy returns 100 units because they did not fit the customer's needs (invoice amount: $1,100). Allied restores the units, which cost $700, to its inventory.

- **May 8**: Macy discovers that 100 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.
Transcribed Image Text:**Required Information** *The following information applies to the questions displayed below.* Allied Merchandisers was organized on May 1. Macy Co. 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 2,000 units at a price of $7 cash per unit (for a total cost of $14,000). - **May 5**: Allied sold 1,000 of the units in inventory for $11 per unit (invoice total: $11,000) to Macy Co. under credit terms 2/10, n/60. The goods cost Allied $7,000. - **May 7**: Macy returns 100 units because they did not fit the customer's needs (invoice amount: $1,100). Allied restores the units, which cost $700, to its inventory. - **May 8**: Macy discovers that 100 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.
**Journal Entry Worksheet**

- **Transaction Details**: 
  - Description: Allied made its first and only purchase of inventory for the period on May 3 for 2,000 units at a price of $7 cash per unit (for a total cost of $14,000).
  - Note: Enter debits before credits.

**Journal Entry Table**:

- **Columns**:
  - **Date**: Displays the date of the transaction.
  - **General Journal**: Shows the account titles or descriptions.
  - **Debit**: Records the debit amounts.
  - **Credit**: Records the credit amounts.

- **Row Details**:
  - Date Field: "May 03" is entered, indicating the date of the inventory purchase.
 
- **Buttons**:
  - **Record entry**: Use this to finalize the journal entry.
  - **Clear entry**: Use this to reset the fields for a new entry.
  - **View general journal**: Use this to view the full general journal.

This worksheet is designed for recording transactions, ensuring that debits and credits are entered accurately to maintain balance in accounting records.
Transcribed Image Text:**Journal Entry Worksheet** - **Transaction Details**: - Description: Allied made its first and only purchase of inventory for the period on May 3 for 2,000 units at a price of $7 cash per unit (for a total cost of $14,000). - Note: Enter debits before credits. **Journal Entry Table**: - **Columns**: - **Date**: Displays the date of the transaction. - **General Journal**: Shows the account titles or descriptions. - **Debit**: Records the debit amounts. - **Credit**: Records the credit amounts. - **Row Details**: - Date Field: "May 03" is entered, indicating the date of the inventory purchase. - **Buttons**: - **Record entry**: Use this to finalize the journal entry. - **Clear entry**: Use this to reset the fields for a new entry. - **View general journal**: Use this to view the full general journal. This worksheet is designed for recording transactions, ensuring that debits and credits are entered accurately to maintain balance in accounting records.
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