2 value 1000 points Allied Parts was organized on May 1 2015

2. value 10.00 points Allied Parts was organized on May 1, 2015, and made its first purchase of merchandise on May 3. The purchase was for 2,000 units at a price of $10 per unit. On May 5, Allied Parts sold 1,500 of the units for $14 per unit to Baker Co. Terms of the sale were 2/10, n/60. a. On May 7, Baker returns 200 units because they did not fit the customer\'s needs. Allied Parts restores the units to its inventory. b. 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. c. 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. View transaction list Journal entry worksheet 3 4 On May 5, Allied Parts sold 1,500 of the units for $14 per unit to Baker Co Terms of the sale were 2/10, n/60.

Solution

Solution: In the books of Baker Co. Date General Journal Debit Credit May 05 Merchandise inventory 21,000 Accounts payable 21,000 Notes: [1,500 units x $14 per unit = $21,000 ] May 07 Accounts payable 2,800 Merchandise inventory 2,800 Notes: [200 units x $14 per unit = $28,00 ] May 08 Accounts payable 600 Merchandise inventory 600 May 15 Accounts payable 680 Merchandise inventory 680 Notes: [(40 units x $14 per unit + $40 )= $560 +$120 = 680] Please feel free to ask if anything about above solution in comment section of the question.