Question

May 3 Allied made its first and only purchase of inventory for the period on May 3 for 2,898 units at a price of $9 cash per unit (for a total cost of $18,000)

 5 Allied sold 1,000 of the units in inventory for $13 per unit (invoice total: $13,299) to Macy Co. under credit terms 2/10, n/6e. The goods cost Allied $9,889.

 7 Macy returns 100 units because they did not fit the customer's needs (invoice amount: $1,300). Allied restores the units, which cost $900, 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 $500 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; it purchases these units for resale. 

Answer 1

Answer- Journal Entries in the books of Macy Co.

Date	General Journal	Debit	Credit
May 3	No Journal Entry Required
May 5	Merchandise Inventory	13,000
	Accounts Payable		13,000
	(To record the purchase of inventory)
May 7	Accounts Payable	1,300
	Merchandise Inventory		1,300
	(To record the purchase return)
May 8	Accounts Payable	500
	Merchandise Inventory		500
	(To record the allowance to Macy)
May 15	Accounts Payable ($13,000-$1,300-$500)	11,200
	Merchandise Inventory ($13,000-$1,300-$500)*2%		224
	Cash ($13,000-$1,300-$500)*98%		10,976
	(To record the payment on account)