Q5Allied Merchandisers was organized on May 1. Macy Company is a major customer (buyer) of Allied (seller) products.May 3Allied made its first and only purchase of inventory for the period on May 3 for 1,000 units at a price of $8 cash per unit (for a total cost of $8,000).May 5Allied sold 500 of the units in inventory for $12 per unit (invoice total: $6,000) to Macy Company under credit terms 2/10, n/60. The goods cost Allied $4,000.May 7Macy returns 50 units because they did not fit the customer’s needs (invoice amount: $600). Allied restores the units, which cost $400, to its inventory.May 8Macy discovers that 50 units are scuffed but are still of use and, therefore, keeps the units. Allied gives a price reduction (allowance) and credits Macy's accounts receivable for $200 to compensate for the damage.May 15Allied receives payment from Macy for the amount owed on the May 5 purchase; payment is net of returns, allowances, and any cash discount.Prepare journal entries to record the following transactions for Allied assuming it uses a perpetual inventory system and the gross method. Journal entry worksheet<23 4 5Allied made its first and only purchase of inventory for the period on May 3 for1,000 units at a price of $8 cash per unit (for a total cost of $8,000).DateMay 03Note: Enter debits before credits.General JournalDebitCredit

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Intermediate Accounting: Reporting And Analysis

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ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter7: Inventories: Cost Measurement And Flow Assumptions

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Allied Merchandisers was organized on May 1. Macy Company is a major customer (buyer) of Allied (seller) products.

May 3	Allied made its first and only purchase of inventory for the period on May 3 for 1,000 units at a price of $8 cash per unit (for a total cost of $8,000).
May 5	Allied sold 500 of the units in inventory for $12 per unit (invoice total: $6,000) to Macy Company under credit terms 2/10, n/60. The goods cost Allied $4,000.
May 7	Macy returns 50 units because they did not fit the customer’s needs (invoice amount: $600). Allied restores the units, which cost $400, to its inventory.
May 8	Macy discovers that 50 units are scuffed but are still of use and, therefore, keeps the units. Allied gives a price reduction (allowance) and credits Macy's accounts receivable for $200 to compensate for the damage.
May 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.

Prepare journal entries to record the following transactions for Allied assuming it uses a perpetual inventory system and the gross method.

Journal entry worksheet
<
2
3 4 5
Allied made its first and only purchase of inventory for the period on May 3 for
1,000 units at a price of $8 cash per unit (for a total cost of $8,000).
Date
May 03
Note: Enter debits before credits.
General Journal
Debit
Credit

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