Question

Required information 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 $12 cash per unit (for a total cost of $24,000). 5 Allied sold 1,000 of the units in inventory for $16 per unit (invoice total: $16,000) to Macy Co. under credit terms 2/10, n/60. The goods cost Allied $12,000. 7 Macy returns 100 units because they did not fit the customer's needs (invoice amount: $1,600). Allied restores the units, which cost $1,200, to its inventory. 8 Macy discovers that 100 units are scuffed but are still of use and, therefore, keeps the units. Allied sends Macy a credit memorandum for $800 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.

Answer 1

Solution 1:

Journal Entries - Allied Merchandisers
Event	Particulars	Debit	Credit
3-May	Inventory Dr	$24,000.00
	To Accounts payable		$24,000.00
	(To record inventory purchase)
5-May	Accounts receivables - Macy Dr	$16,000.00
	To Sales revenue		$16,000.00
	(To record sales on account)
5-May	Cost of goods sold Dr	$12,000.00
	To Merchandise Inventory		$12,000.00
	(To record cost of goods sold)
7-May	Sales returns and allowances Dr	$1,600.00
	To Accounts receivables - Macy		$1,600.00
	(To record sales return)
7-May	Merchandise inventory Dr	$1,200.00
	To Cost of goods sold		$1,200.00
	(Being goods returned taken into inventory)
8-May	Sales returns and allowances Dr	$800.00
	To Accounts receivables - Macy		$800.00
	(Being allowance given to customer)
15-May	Cash Dr	$13,328.00
	Sales discount Dr	$272.00
	To Accounts receivables - Macy		$13,600.00
	(To record collection from customer)

Journal Entries - Macy Co
Date	Particulars	Debit	Credit
3-May	No Journal Entry Required
5-May	Inventory Dr	$16,000.00
	To Accounts payable		$16,000.00
	(To record purchase of inventory on account)
7-May	Accounts payable Dr	$1,600.00
	To Inventory		$1,600.00
	(To record purchase returns)
8-May	Accounts payable Dr	$800.00
	To Inventory		$800.00
	(Being allowance received for damaged goods)
15-May	Accounts payable Dr	$13,600.00
	To Cash		$13,328.00
	To Inventory		$272.00
	(To record payment to supplier)

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