Question

Required information [The following information applies to the questions displayed below.) ABC Merchandisers was organized on May 1. MNM Co. is a major customer (buyer) of ABC (seller) products. May 3 ABC made its first and only purchase of inventory for the period on May 3 for 3,000 units at a price of $10 cash per unit (for a total cost of $30,000). 5 ABC sold 1,500 of the units in inventory for $14 per unit (invoice total: $21,000) to MNM Co. under credit terms 2/10, n/60. The goods cost ABC $15,000. 7 MNM returns 150 units because they did not fit the customer's needs (invoice amount: $2,100). ABC restores the units, which cost $1,500, to its inventory. 8 MNM discovers that 150 units are scuffed but are still of use and, therefore, keeps the units. ABC gives a price reduction (allowance) and credits MNM's accounts receivable for $900 to compe 15 ABC receives payment from MNM for the amount owed on the May 5 purchase; payment is net of returns, allowances, and any cash discount. Prepare journal entries to record the following transactions for ABC assuming it uses a perpetual inventory system and the gross method. View transaction list Journal entry worksheet 1 2 3 4 5 6 7 Allied made its first and only purchase of inventory for the period on May 3 for 3,000 units at a price of $10 cash per unit (for a total cost of $30,000). Note: Enter debits before credits. Date General Journal Debit Credit May 03 Record entry Clear entry View general journal

Answer 1

		Debit	Credit
May 03	Merchandise inventory	30000
	Cash		30000
May 05	Accounts receivable	21000
	Sales		21000
May 05	Cost of goods sold	15000
	Merchandise inventory		15000
May 07	Sales returns and allowances	2100
	Accounts receivable		2100
May 07	Merchandise inventory	1500
	Cost of goods sold		1500
May 08	Sales returns and allowances	900
	Accounts receivable		900
May 15	Cash	17640
	Sales discounts	360		=18000*2%
	Accounts receivable		18000	=21000-2100-900