Question

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 $11 cash per unit (for a total cost of $33,000).
		5		Allied sold 1,500 of the units in inventory for $15 per unit (invoice total: $22,500) to Macy Co. under credit terms 2/10, n/60. The goods cost Allied $16,500.
		7		Macy returns 150 units because they did not fit the customer’s needs (invoice amount: $2,250). Allied restores the units, which cost $1,650, 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 $1,050 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.

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

Journal entry

Date	account and explanation	Debit	Credit
May 3	No Journal entry
May 5	Merchandise inventory	22500
	Account payable		22500
	(To record purchase)
May 7	Account payable	2250
	Merchandise inventory		2250
	(To record purchase return)
May 8	Account payable	1050
	Merchandise inventory		1050
	(To record purchase allowance)
May 15	Account payable (22500-2250-1050)	19400
	Cash (19400*98%)		19012
	Merchandise inventory		388