Question

Required information 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 $12 cash per unit (for a total cost of $24,000). 5 Allied sold 1,000 of the units in inventory for $16 per unit (invoice total: $16,000) to Macy Co. under credit terms 2/10, n/60. The goods cost Allied $12,000. 7 Macy returns 100 units because they did not fit the customer's needs (invoice amount: $1,600). Allied restores the units, which cost $1,200, to its inventory 8 Macy discovers that 100 units are scuffed but are still of use and, therefore, keeps the units. Allied sends Macy a credit memorandum for $800 toward the original invoice amount 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. (Allied estimates returns using an adjusting entry at each year-end.) View transaction list Journal entry worksheet 2 3 4 5 6 7 Allied made its first and only purchase of inventory for the period on May 3 for 2,000 units at a price of $12 cash per unit (for a total cost of $24,000). Note: Enter debits before credits. General Journal Debit Credit Date May 03 Record entry Clear entry View general journal

Answer 1

Answer:

Date	Particulars	Debit ($)	Credit ($)
3-May	Inventory	24000
	Cash		24000
	(To record purchase of inventory for cash)
5-May	Accounts receivable	16000
	Sales revenue		16000
	(To record inventory sold on credit)
5-May	Cost of goods sold	12000
	Inventory		12000
	(To record cost of goods sold)
7-May	Sales return and allowances	1600
	Accounts receivable		1600
	(To record goods returned by customer)
7-May	Inventory	1200
	Cost of goods sold		1200
	(To record cost of goods sold returned by customer)
8-May	Sales return and allowances	800
	Accounts receivable		800
	(To record allowance provided to customer)
15-May	Cash (13600-272)	13328
	Sales discount (13600*2%)	272
	Accounts receivable (16000 -1600 - 800)		13600
	(To record cash received from customer)