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 the appropriate journal entries for Macy Co. to record each of the May transactions. Macy is a retailer that uses the gross method and a perpetual inventory system, and purchases these units for resale. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
  

May 3 Allied made its first and only purchase of inventory for the period on May 3 for 2,000 units at a price of $9 cash per unit (for a total cost of $18,000). 5 Allied sold 1,000 of the units in inventory for $13 per unit (invoice total: $13,000) to Macy Co. under credit terms 2/10, n/60. The goods cost $9,000 to Allied. 7 Macy returns 100 units because they did not fit the customer’s needs (invoice amount: $1,300). Allied restores the units, which cost $900, to its inventory. 8 Macy discovers that 100 units are scuffed but are still of use and, therefore, keeps the units. Allied sends Macy a credit memorandum for $500 toward the original invoice amount to compensate for the damage. 15 Allied receives payment from Macy for the amount owed on the May 5 purchase; payment is net of returns, allowances, and any cash discount.

Explanation / Answer

Answer

Date Particulars Dr Cr May 3 Inventory 18000 Cash 18000 May 5 Accounts Receivable 13000 Sales 13000 May 5 Cost of Good sold 9000 Inventory 9000 May 7 Sales Return & Allowances 1300 Accounts Receivable 1300 May 7 Inventory 900 Cost of Good sold 900 May 8 Sales Return & Allowances 500 Accounts Receivable 500 May 15 Cash 10976 Sales discount (11200*2%) 224 Accounts Recievable(13000-1300-500) 11200

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

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