Alied Merchandisers was organized on May 1. Macy Co. is a maor ustomer (buyer) of Allied selen. produets. Prepare journal entries to record the following transactions for Alied assuming it uses a per petual inventory system and the gross method. (Allied estimates returns using an adjusting entry at eat-year-end.)
May 3 Allied made its first and only purchase of inventory for the period on May 3 for 2,000 unisata
price of $10 cash per unit (for a total cost of $20,000).
5
Allied sold 1,500 of the units in inventory for $14 per unit (invoice total: $21,000 to Macy Co. under credit terms 2/10, n/60. The goods cost Allied $15,000.
- Macy returns 125 units because they did not fit the customer's needs (invoice amount: $1,750).
Allied restores the units, which cost $1,250, to its inventory.
8
Macy discovers that 200 units are scuffed but are still of use and, therefore, keeps the units.
Allied sends Macy a credit memorandum for $300 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.