Allied Parts was organized on May 1, 2013, and made its first purchase of mercha

Question

Allied Parts was organized on May 1, 2013, and made its first purchase of merchandise on May 3. The purchase was for 1,500 units at a price of $11 per unit. On May 5, Allied Parts sold 900 of the units for $15 per unit to Baker Co. Terms of the sale were 2/10, n/60. On May 7, Baker returns 315 units because they did not fit the customer's needs. Allied Parts restores the units to its inventory. On May 8, Baker discovers that 75 units are damaged but are still of some use and, therefore, keeps the units. Allied Parts sends Baker a credit memorandum for $525 to compensate for the damage. On May 15, Baker discovers that 90 units are the wrong color. Baker keeps 54 of these units because Allied Parts sends a $110 credit memorandum to compensate. Baker returns the remaining 36 units to Allied Parts. Allied Parts restores the 36 returned units to its inventory. Prepare the appropriate journal entries for Baker Co. to record the May 5 purchase and each of the three separate transactions a through c. Baker is a retailer that uses a perpetual inventory system and purchases these units for resale.

Explanation / Answer

5-05 is $13500, 5-7 $4725, 5-08 is a simple $525, and 5-15 is $540

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