Question

Required information 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 1,000 units at a price of $12 cash per unit (for a total cost of $12,000). 5 Allied sold 500 of the units in inventory for $16 per unit (invoice total: $8,000) to Macy Co. under credit terms 2/10, n/60. The goods cost Allied $6,000. 7 Macy returns 50 units because they did not fit the customer's needs (invoice amount: $800). Allied restores the units, which cost $600, to its inventory. 8 Macy discovers that 50 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 $400 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. Exercise 4-5 Recording purchases, purchases returns, and purchases allowances LO P1 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. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

Date		Debit	Credit
May 03	No journal entry required
May 05	Merchandise Inventory	8000
	Accounts Payable		8000
May 07	Accounts Payable	800
	Merchandise Inventory		800
May 08	Accounts Payable	400
	Merchandise Inventory		400
May 15	Accounts Payable	6800
	Merchandise Inventory		136	=6800*2%
	Cash		6664