Check Required information Use the following information for

Check Required information Use the following information for the Exercises below. Allied Merchandisers was organized on May 1. Macy Co. 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 ry for $11 per unit (invoice total: $5,500) to Macy co. under 7 Macy returns 50 units because they did not fit the customer\'s needs (invoice anount: $550). Allied 8 Macy discovers that 50 units are scuffed but are still of use and, therefore, keeps the units. Allied price of $7 cash per unit (for a total cost of $7,000) credit terms 2/10, n/60. The goods cost Allied $3,500 restores the units, which cost $350, to its inventory sends Macy a credit memorandum for $150 toward the original invoice anount to compensate for the 5 Allied sold 500 of the units in invento damage 15 Allied receives payment from Macy for the amount oued on the Hay 5 purchase: payment is net of returns, allowances, and any cash discount Exercise 4-4 Recording sales, sales returns, and sales allowances LO P2 Prepare journal entries to record the following transactions for Allied assuming it uses a perpetual inventory system and the gross method. (Allied estimates returns using an adjusting entry at each year-end.) View transaction list Journal entry worksheet Prev1 of 1E Next >

Solution

Journal Entries Sr. No. Date Account Title and explanation Debit Credit 1 May , 03 Inventory $                       7,000       To Cash $                        7,000 2 May , 05 Macy Co. $                       5,500       To Sales $                        5,500 3 May , 05 Cost of Goods Sold $                       3,500       To Inventory $                        3,500 Sales Return $                          550 4 May , 07      To Macy Co. $                            550 Inventory $                          350 5 May , 07       To Cost of Goods Sold $                            350 6 May , 08 Allowances for Damage $                          150        To Macy Co. $                            150 Cash $                       4,701 7 May , 15 Discount on Sale ($ 5,500 -$ 550 ) X 2% $                             99                To Macy Co.($ 5,500 - $ 550 -$ 350) $                        4,800