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Requiredi Use the following information for the Exercises below. The following information applies to the questions displayed 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 2,000 units at a 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
7 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.
Answer:
-The journal entries in the books of Allied Merchandisers have been provided with the use of perpetual system as below:
Date | Account Titles | Debit | Credit |
03 May | Merchandise Inventory (2,000*10) | $20,000 | |
Cash | $20,000 | ||
05 May | Accounts Receivables (1,500*14) | $21,000 | |
Sales | $21,000 | ||
05 May | Cost of Goods Sold (1,500*10) | $15,000 | |
Merchandise Inventory | $15,000 | ||
07 May | Sales Returns and Allowances (125*14) | $1,750 | |
Accounts Receivables | $1,750 | ||
07 May | Merchandise Inventory (125*10) | $1,250 | |
Cost of Goods Sold | $1,250 | ||
08 May | Sales Returns and Allowances | $300 | |
Accounts Receivables | $300 | ||
15 May | Cash (18,950 - 379) | $18,571 | |
Sales Discounts (18,950*2%) | $379 | ||
Accounts Receivables (21,000 - 1,750 - 300) | $18,950 |
_____
The journal entries in the books of Macy with the use of perpetual inventory system are given as below:
Date | Account Titles | Debit | Credit |
03 May | No Entry Required | ||
05 May | Merchandise Inventory | $21,000 | |
Accounts Payable | $21,000 | ||
07 May | Accounts Payable | $1,750 | |
Merchandise Inventory | $1,750 | ||
08 May | Accounts Payable | $300 | |
Merchandise Inventory | $300 | ||
15 May | Accounts Payable | $18,950 | |
Merchandise Inventory | $379 | ||
Cash | $18,571 |