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

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Accounting

Allied Merchandisers was organized on May 1. Macy Company 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 1,000 units at a price of $7 cash per unit (for a total cost of $7,000).
May 5 Allied sold 500 of the units in inventory for $11 per unit (invoice total: $5,500) to Macy Company under credit terms 2/10, n/60. The goods cost Allied $3,500.
May 7 Macy returns 50 units because they did not fit the customers needs (invoice amount: $550). Allied restores the units, which cost $350, to its inventory.
May 8 Macy discovers that 50 units are scuffed but are still of use and, therefore, keeps the units. Allied gives a price reduction (allowance) and credits Macy's accounts receivable for $150 to compensate for the damage.
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.

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