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Use the following information for the Exercises below.

$[$The following information applies to the questions displayed below.$]$

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 $$10$ cash per unit $($for a total cost of $$10,000).$

May $5$ Allied sold $500$ of the units in inventory for $$14$ per unit $($invoice total: $$7,000)$ to Macy Company under credit terms $\frac{2}{10},\frac{n}{60}.$ The goods cost Allied $$5,000.$

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 $8$ 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 $$300$ 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.

Exercise $4-6($Algo$)$ Recording sales, sales returns, and sales allowances LO P$2$

Prepare journal entries to record the following transactions for Allied assuming it uses a perpetual inventory system and the gross method.

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$\backslash$table$[[$No$,$Date,,General Journal,Debit,Credit$],[1,$May $03,$Merchandise inventory,,$10,000,],[,,$Cash,,,$],[,,,,,],[2,$May $05,$Accounts receivable,$7,000,000,,]]$

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