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Required information Skip to question [The following information applies to the questions displayed below.]    Allied...

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[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 1,000 of the units in inventory for $14 per unit (invoice total: $14,000) to Macy Co. under credit terms 2/10, n/60. The goods cost Allied $10,000.
7 Macy returns 100 units because they did not fit the customer’s needs (invoice amount: $1,400). Allied restores the units, which cost $1,000, to its inventory.
8 Macy discovers that 100 units are scuffed but are still of use and, therefore, keeps the units. Allied gives a price reduction (allowance) and credits Macy's accounts receivable for $600 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.

Prepare the appropriate journal entries for Macy Co. to record each of the May transactions. Macy is a retailer that uses the gross method and a perpetual inventory system, and purchases these units for resale. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Solutions

Expert Solution

In the books of Mary Co.

Journal for the month of May

Please note on 3rd May there is no entry required to be record in the books of Mary Co.

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ekkarill92 answered 1 year ago
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