Allied Merchandisers was organized on May 1. Macy Co. is a major customer (buyer

Question

Allied Merchandisers was organized on May 1. Macy Co. is a major customer (buyer) of Allied (seller) products. Prepare journal entries to record the following transactions for Allied assuming it uses a per- petual inventory system and the gross method. (Allied estimates returns using an adjusting entry at e year-end.) Recording sales saiesA returns, and sales ach P2 Allied made its first and only purchase of inventory for the period on May 3 for 2,000 units at a price of $10 cash per unit (for a total cost of $20,000). May 3 5 Allied sold 1,500 of the units in inventory for $14 per unit (invoice total: $21,000) to Macy Co. 7 Macy returns 125 units because they did not fit the customer's needs (invoice amount: $1,750) 8 Macy discovers that 200 units are scuffed but are still of use and, therefore, keeps the units under credit terms 2/10, n/60. The goods cost Allied $15,000 Allied restores the units, which cost $1,250, to its inventory Allied sends Macy a credit memorandum for $300 toward the original invoice amount to compensate for the damage Allied receives payment from Macy for the amount owed on the May 5 purchase; payment is net of returns, allowances, and any cash discount. 15

Explanation / Answer

Solution:-

$379

Date Particulars Debit Credit May , 3 To record inventory purchase Inventory $20,000 Accounts payable $20,000 May , 5 To record sales made Accounts receivable $21,000 Sales $21,000 Cost of goods sold $15,000 Inventory $15,000 May ,7 To record returns Sales return $1,750 Accounts receivable $1,750 Inventory $1,250 Cost of goods sold $1,250 May , 8 To record credit memo Sales return $300 Accounts receivable $300 May , 15 To record payment received Cash 18,571 Discount (18,950 * 0.02)

$379

Accounts receivable   $18,950

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.