Allied Parts was organized on May 1, 2015. and made its fast purchase of merchan

Question

Allied Parts was organized on May 1, 2015. and made its fast purchase of merchandise on May 3. The purchase was tor 2,000 units al a price of $10 per unit. On May 5, Allied Parts sold 1,500 of the units tor $14 per unit to Baker Co Terms of the sale were 2/10. n/60. On May 7, Baker returns 200 units because they did not fit the customer's needs. Allied Parts restores the units to its inventory. 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. 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. Prepare the appropriate journal entries for Baker Co. to record the May 5 purchase and each of the three separate transactions. Baker is a retailer that uses a perpetual inventory system and purchases these units for resale.

Explanation / Answer

Date General Journal Debit Credit May-05 Inventory 21,000.00 Accounts Payable 21,000.00 May-07 Accounts Payable     2,800.00 Inventory     2,800.00 May-08 Accounts Payable        612.00 Inventory        600.00 Discount           12.00 May-15 Accounts Payable        682.40 Inventory        680.00 Discount             2.40

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

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