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 1,700 units at a price of $10 per unit On May 5. Allied Parts sold 1,020 of the units for $14 per unit to Baker Co Terms of the sale wore 2/10, n/60. On May 7, Baker returns 357 units because they did not fit the customer's needs. Allied Parts restores the units to its inventory. On May 8, Baker discovers that 85 units are damaged but me still of some use and, therefore, keeps the units Allied Parts sends Baker a credit memorandum for $510 to compensate for the damage. On May 15, Baker discovers that 102 units are the wrong color Baker keeps 61 of these units because Allied Parts sends a $122 credit memorandum to compensate Baker returns the remaining 41 units to Allied Parts Allied Parts restores the 41 returned units to its inventory Prepare entries for Allied Parts to rocord the May 5 sale and each of the following separate transactions a through c using a perpetual inventory system.

Explanation / Answer

Date Entry Debit Credit 5-May-13 Accounts receivable a/c Dr $14,280.00 To sales a/c Cr $14,280.00 (Being sales made on credit) 5-May-13 Cost of goods sold a/c Dr $10,200.00 To inventory a/c Cr $10,200.00 (Being cost of units sold transferred to cost of goods sold) 7-May-13 Sales a/c Dr $4,998.00 To Accounts receivable a/c Cr $4,998.00 (Being return of 357 untis accepted) 7-May-13 Inventory a/c Dr $3,570.00 To Cost of goods sold a/c Cr $3,570.00 (Being sales returns inclueded in inventory) 8-May-13 Sales returns and allowances a/c Dr $510.00 To Accounts receivable a/c Cr $510.00 15-May-13 15-May-13 Sales returns and allowances a/c Dr $122.00 To Accounts receivable a/c Cr $122.00 (Being credit memo received for goods not meeting specifications) 15-May-13 Sales a/c Dr $574.00 To Accounts receivable a/c Cr $574.00 (Being return of 357 untis accepted) 15-May-13 Inventory a/c Dr $410.00 To Cost of goods sold a/c Cr $410.00 (Being sales returns inclueded in inventory)

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