Question

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 $9 cash per unit (for a total cost of $27,000).
5 Allied sold 1,500 of the units in inventory for $13 per unit (invoice total: $19,500) to Macy Co. under credit terms 2/10, n/60. The goods cost $13,500 to Allied.
7 Macy returns 150 units because they did not fit the customer’s needs (invoice amount: $1,950). Allied restores the units, which cost $1,350, 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 $750 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 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

Answer:

Explanation:

May 3

Dr merchandise inventory 27,000

   Cr Cash 27,000

May 5

Dr Accounts receivable 19,500

    Cr Sales 19,500

May 5

Dr COGS 13,500

     Cr Merchandise inventory 13,500

May 7

Dr Sales returns and allowances 1,950

     Cr Accounts receivable 1950

Dr Merchandise inventory 1350

     Cr COGS 1350

May 8

Dr Sales returns and allowances 750

     Cr Accounts receivable 750

May 15

Dr Cash 16464

Dr Sales discount 336

    Cr Account receivable 16800

19500-1950-750 = 16800

16800*2% = 336