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Requiredi Use the following information for the Exercises below

Accounting

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.

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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