Allied Merchandisers was organized on May 1. Macy Co. is a major customer (buyer) of Allied...

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Solution:

Journal Entries - Allied Merchandisers
Event	Particulars	Debit	Credit
3-May	Inventory Dr	$24,000.00
	To Accounts payable		$24,000.00
	(To record inventory purchase)

5-May	Accounts receivables - Macy Dr	$18,000.00
	To Sales revenue		$18,000.00
	(To record sales on account)

5-May	Cost of goods sold Dr	$12,000.00
	To Merchandise Inventory		$12,000.00
	(To record cost of goods sold)

7-May	Sales returns and allowances Dr	$1,800.00
	To Accounts receivables - Macy		$1,800.00
	(To record sales return)

7-May	Merchandise inventory Dr	$1,200.00
	To Cost of goods sold		$1,200.00
	(Being goods returned taken into inventory)

8-May	Sales returns and allowances Dr	$600.00
	To Accounts receivables - Macy		$600.00
	(Being allowance given to customer)

15-May	Cash Dr	$15,288.00
	Sales discount Dr	$312.00
	To Accounts receivables - Macy		$15,600.00
	(To record collection from customer)

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May	3	Allied made its first and onlypurchase of inventory for the period on May 3 for 3,000 units at aprice of $8 cash per unit (for a total cost of $24,000).
	5	Allied sold 1,500 of the units ininventory for $12 per unit (invoice total: $18,000) to Macy Co.under credit terms 2/10, n/60. The goods cost $12,000 toAllied.
	7	Macy returns 150 units because theydid not fit the customer’s needs (invoice amount: $1,800). Alliedrestores the units, which cost $1,200, to its inventory.
	8	Macy discovers that 150 units arescuffed but are still of use and, therefore, keeps the units.Allied sends Macy a credit memorandum for $600 toward the originalinvoice amount to compensate for the damage.
	15	Allied receives payment from Macy for the amount owed on the May5 purchase; payment is net of returns, allowances, and any cashdiscount.

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