Allied Parts was organized on May 1, 2015, and made its first purchase of mercha
ID: 2418099 • Letter: A
Question
Allied Parts was organized on May 1, 2015, and made its first purchase of merchandise on May 3. The purchase was for 2,000 units at a price of $10 per unit. On may 5, Allied Parts sold 1,500 of the units for $14 per unit to Baker Co. Terms of the sale were 2/10, n/60. Prepare entries for Allied Parts to record the May 5 sale and each of the following separate transactions a through c using perpetual inventory system.
a. On May 7, Baker returns 200 units because they did not fit the customer's needs. Allied Parts restores the units to its inventory.
b. On May 8, Baker discovers that 300 units are damaged but are still of some use and, therefore, keeps the units. Allied Parts sends Baker a credit memorandum for $600 to compensate for the damage.
c. On May 15, Baker discovers that 100 units are the wrong color. Baker keeps 60 of these units because Allied Parts sends a $120 credit memorandum to compensate. Baker returns the remaining 40 units to Allied Parts. Allied Parts restores the 40 returned units to its inventory.
Explanation / Answer
1- SUPPLIES DEBIT 200000
CREDIT BILLS PAYABLE 20000
2- COST OF GOODS SOLD DEBIT 15000
CREDIT SUPPLIES 15000
2- BAKER CO. DEBIT 21000
CREDIT SALES 21000
3- SALES RETURN DEBIT 2800
CREDIT BAKES CO 2800
4 SUPPLIES DEBIT 2000
CREDIT COST OF GOODS SOLD 2000
5- ALLOWANCES FOR DAMAGED GOODS DEBIT 600
CREDIT BAKES CO 600
6-ALLOWANCES FOR DAMAGED GOODS DEBIT 120
CREDIT BAKES CO 120
7- SALES RETURN DEBIT 520
CREIT BAKES CO 520
8- SUPPLIES DEBIT 520
CREDIT COST OF GOODS SOLD 520
4-
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