[The following information applies to the questions displayed below.] Allied Merchandisers was organized on May 1. Macy Company 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 $11 cash per unit (for a total cost of $11,000). May 5 Allied sold 500 of the units in inventory for $15 per unit (invoice total: $7,500) to Macy Company under credit terms 2/10, n/60. The goods cost Allied $5,500. May 7 Macy returns 50 units because they did not fit the customer's needs (invoice amount: $750). Allied restores the units, which cost $550, to its inventory. May 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 $350 to compensate for the damage. May 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 5-8 (Algo) Recording purchases, purchases returns, and purchases allowances LO P1 Prepare the appropriate journal entries for Macy Company 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.)
[The following information applies to the questions displayed below.] Allied Merchandisers was organized on May 1. Macy Company 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 $11 cash per unit (for a total cost of $11,000). May 5 Allied sold 500 of the units in inventory for $15 per unit (invoice total: $7,500) to Macy Company under credit terms 2/10, n/60. The goods cost Allied $5,500. May 7 Macy returns 50 units because they did not fit the customer's needs (invoice amount: $750). Allied restores the units, which cost $550, to its inventory. May 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 $350 to compensate for the damage. May 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 5-8 (Algo) Recording purchases, purchases returns, and purchases allowances LO P1 Prepare the appropriate journal entries for Macy Company 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.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![[The following information applies to the
questions displayed below.]
Allied Merchandisers was organized on May 1.
Macy Company 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
$11 cash per unit (for a total cost of
$11,000).
May 5 Allied sold 500 of the units in
inventory for $15 per unit (invoice
total: $7,500) to Macy Company under
credit terms 2/10, n/60. The goods
cost Allied $5,500.
May 7 Macy returns 50 units because they did
not fit the customer's needs (invoice
amount: $750). Allied restores the
units, which cost $550, to its
inventory.
May 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 $350 to compensate for the damage.
May 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 5-8 (Algo) Recording purchases,
purchases returns, and purchases
allowances LO P1
Prepare the appropriate journal entries for
Macy Company 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.)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff97de970-42c9-4f0f-85f6-0a4a37bc8afa%2F4a0deac6-eb03-43c6-ae35-7579dd5f2278%2Ffd0drrl_processed.jpeg&w=3840&q=75)
Transcribed Image Text:[The following information applies to the
questions displayed below.]
Allied Merchandisers was organized on May 1.
Macy Company 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
$11 cash per unit (for a total cost of
$11,000).
May 5 Allied sold 500 of the units in
inventory for $15 per unit (invoice
total: $7,500) to Macy Company under
credit terms 2/10, n/60. The goods
cost Allied $5,500.
May 7 Macy returns 50 units because they did
not fit the customer's needs (invoice
amount: $750). Allied restores the
units, which cost $550, to its
inventory.
May 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 $350 to compensate for the damage.
May 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 5-8 (Algo) Recording purchases,
purchases returns, and purchases
allowances LO P1
Prepare the appropriate journal entries for
Macy Company 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.)
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