Question

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 3,000 units at a price of $10 cash per unit (for a total cost of $30,000). 5 Allied sold 1,500 of the units in inventory for $14 per unit (invoice total: $21,000) to Macy Co. under credit terms 2/10, n/60. The goods cost Allied $15,000. 7 Macy returns 150 units because they did not fit the customer’s needs (invoice amount: $2,100). Allied restores the units, which cost $1,500, to its inventory. 8 Macy discovers that 150 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 $900 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.

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, and 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

May 03	NO journal entry required
May 05	Merchandise Inventory	21000
	Accounts Payable		21000
May 07	Accounts Payable	2100
	Merchandise Inventory		2100
May 08	Accounts Payable	900
	Merchandise Inventory		900
May 15	Accounts Payable	18000
	Merchandise Inventory		360	=18000*2%
	Cash		17640