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 uni

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3 years ago

13

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 uni

t (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.)

Business