Question

GLUWUS DARWurth H w Dashboard Wine keybank Saved Help Save & Exit Submit Check my work 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 $1l cash per unit (for a total cost of $22,000). 5 Allied sold 1,000 of the units in inventory for $15 per unit (invoice total: $15,000) to Macy co. under credit torna 2/10, 1/60. The goods goat Allied $11,000. 7 Maey returns 100 units because they did not fit the customer's needs (invoice amount: $1,500). Allied restores the units, which cost $1,100, to its inventory. B Macy discovers that 100 units are scuffed but are still of use and, therefore, keeps the unita. Allied gives a price reduction (allowance) and credit Macy's accounts ivable $700 compensate for the damage. 15 Allied receives paynent from Macy for the amount oved on the May 5 purchase payment is net of returns, allowances, and any cash discount. Use the above informations, analyze each transaction by indicating its effects on the income statement-specifically, identify the accounts and amounts (including + or -) for each transaction. Income Statement Components May 3 Increase/Decrease May 5 Increase/Decrease May 7 Increase/Decrease Amount Amount May & Increase/Decrease Amount Amoi Sales Sales discounts Sales returns and allowances Net soos Cost of goods sold Gross pront

Answer 1

Income statement components	3-May	5-May	7-May	8-May	15-May
	Amount	Inc/dec	Inc/dec	Amount	Inc/dec	Amount	Inc/dec	Amount	Inc/dec	Amount
Sales			increase	15000
Sales discount									increase	256
Sales return& allowances					Increase	1500	increase	700
Net sales			increase	15000	decrease	1500	Decrease	700	decrease	256
Cost of goods sold			increase	11000	decrease	1100
Gross profit			increase	4000	decrease	400	Decrease	700	decrease	256