Question

Check my work Check My Work button is now enabledItem 3Item 3 Part 1 of 2 1.38 points Required information Use the following information for the Exercises 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 $8 cash per unit (for a total cost of $24,000). 5 Allied sold 1,500 of the units in inventory for $12 per unit (invoice total: $18,000) to Macy Co. under credit terms 2/10, n/60. The goods cost Allied $12,000. 7 Macy returns 150 units because they did not fit the customer’s needs (invoice amount: $1,800). Allied restores the units, which cost $1,200, to its inventory. 8 Macy discovers that 150 units are scuffed but are still of use and, therefore, keeps the units. Allied sends Macy a credit memorandum for $600 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. Exercise 4-4 Recording sales, sales returns, and sales allowances LO P2 Prepare journal entries to record the following transactions for Allied assuming it uses a perpetual inventory system and the gross method. (Allied estimates returns using an adjusting entry at each year-end.)

Answer 1

Date	General Journal					Debit	credit
3-May	Merchandise inventory					24,000
	cash						24,000
5-May	Accounts receivable					18,000
	Sales						18,000
5-May	Cost of goods sold					12,000
	Merchandise inventory						12,000
7-May	Sales return and allowance					1,800
	Accounts receivable						1,800
	Merchandise inventory					1,200
	Cost of goods sold						1,200
8-May	Sales return and allowance					600
	Accounts receivable						600
15-May	Cash					15,288
	Sales discount					312
	Accounts receivable						15,600