Question

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 3,000 units at a price of $8 cash per unit (for a total cost of $24,000). 5 Allied sold 1,500 of the units in inventory for $12 per unit invoice total: $18,000) to Macy Co. under credit terms 2/10, n/60. The goods cost Allied $12,000. 7 Macy returns 150 units because they did not fit the customer's needs invoice amount: $1,800). Allied restores the units, which cost $1,200, to its inventory. 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 $600 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. 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 2 3 4 5 6 Allied made its first and only purchase of inventory for the period on May 3 for 3,000 units at a price of $8 cash per unit (for a total cost of $24,000).

Answer 1

Credit Date May 03 Debit 24,000 24,000 May 05 18,000 18,000 12,000 12,000 May 07 1,800 General Journal Merchandise Inventory Cash Accounts Receivable Sales Cost of Goods Sold Merchandise Inventory Sales Returns and Allowances Accounts Receivable Merchandise Inventory Cost of Goods Sold Sales Returns and Allowances Accounts Receivable Cash Sales Discounts ($15,600 * 2%) Accounts Receivable 1,800 1,200 1,200 May 08 600 600 May 15 15,288 312 15,600