Answer:
Perpetual Inventory System
Gross Method
Date Particulars Debit Credit
3 May Merchandise Inventory 10,000
Cash 10,000
May 3 for 1,000 units at a price of $10 cash per unit (for a total cost of $10,000).
5 May Accounts Receivable Macy 7000
Sales 7000
May 5 :Allied sold 500 of the units in inventory for $14 per unit (invoice total: $7,000) to Macy Co. under credit terms 2/10, n/60. The goods cost Allied $5,000.
5 May Cost of Goods Sold 5000
Merchandise Inventory 5000
May 7: Sales Returns 700
Accounts Receivable Macy 700
May 7: Macy returns 50 units because they did not fit the customer’s needs (invoice amount: $700). Allied restores the units, which cost $500, to its inventory.
May 7 Merchandise Inventory 500
Cost of Goods Sold 500
May 8 Sales Returns & Allowance 300
Accounts Receivable Macy 300
8 Macy discovers that 50 units are scuffed but are still of use and, therefore, keeps the units. Allied sends Macy a credit memorandum for $300 toward the original invoice amount to compensate for the
damage.
May 15: Cash 6000
Sales Discounts 120
Accounts Receivable Macy 5880
Payment : $ 7000- $ 700 - $ 300= $ 6000
Discount : 2% of 6000= $ 120
May 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.
