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Requiredi Use the following information for the Exercises below
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.
Expert Solution
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 |
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