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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 2,000 units at a price of $12 cash per unit (for a total cost of $24,000) May 5 Allied sold 1,000 of the units in inventory for $16 per unit (invoice total: $16,000) to Macy Company under credit terms 2/10, n/60. The goods cost Allied $12,000. May 7 Macy returns 100 units because they did not fit the customer's needs (invoice amount: $1,600). Allied restores the units, which cost $1,200, to its inventory. May 8 Macy discovers that 100 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 $800 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. Use the above informations, analyze each transaction by indicating its effects on the income statement-specifically, identify the accounts and amounts (including + or -) for each transaction. May 3 May 7 Income Statement Components Increase or Decrease May 5 Increase or Decrease Amount Amount Increase or Decrease Amount Sales Sales discounts Sales returns and allowances Net sales Cost of goods sold Gross profit May 8 Increase or Decrease Amount May 15 Increase or Decrease Amoun

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 2,000 units at a price of $12 cash per unit (for a total cost of $24,000) May 5 Allied sold 1,000 of the units in inventory for $16 per unit (invoice total: $16,000) to Macy Company under credit terms 2/10, n/60. The goods cost Allied $12,000. May 7 Macy returns 100 units because they did not fit the customer's needs (invoice amount: $1,600). Allied restores the units, which cost $1,200, to its inventory. May 8 Macy discovers that 100 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 $800 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. Use the above informations, analyze each transaction by indicating its effects on the income statement-specifically, identify the accounts and amounts (including + or -) for each transaction. May 3 May 7 Income Statement Components Increase or Decrease May 5 Increase or Decrease Amount Amount Increase or Decrease Amount Sales Sales discounts Sales returns and allowances Net sales Cost of goods sold Gross profit May 8 Increase or Decrease Amount May 15 Increase or Decrease Amoun

Financial And Managerial Accounting
Financial And Managerial Accounting
15th Edition
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:WARREN, Carl S.
Chapter6: Inventories
Section: Chapter Questions
Problem 3MAD: The general merchandise retail industry has a number of segments represented by the following...
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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 2,000 units at a price of $12 cash per unit (for a total cost of $24,000). May 5 Allied sold 1,000 of the units in inventory for $16 per unit (invoice total: $16,000) to Macy Company under credit terms 2/10, n/60. The goods cost Allied $12,000. May 7 Macy returns 100 units because they did not fit the customer's needs (invoice amount: $1,600). Allied restores the units, which cost $1,200, to its inventory. May 8 Macy discovers that 100 units are scuffed but are still of use and, therefore, keeps the units. Allied gives al price reduction (allowance) and credits Macy's accounts receivable for $800 to compensate for the damage. Allied receives payment from Macy for the amount owed on the May 5 purchase; payment is net of returns, allowances, and any cash discount. May 15 21 Use the above informations, analyze each transaction by indicating its effects on the income statement-specifically, identify the accounts and amounts (including + or -) for each transaction. May 3 May 5 Income Statement Components Increase or Decrease May 7 Increase or Decrease Increase or Decrease Amount Amount Amount Sales Sales discounts Sales returns and allowances Net sales Cost of goods sold Gross profit ces May 8 Increase or Decrease Amount May 15 Increase or Decrease Amount
Transcribed Image Text: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 2,000 units at a price of $12 cash per unit (for a total cost of $24,000). May 5 Allied sold 1,000 of the units in inventory for $16 per unit (invoice total: $16,000) to Macy Company under credit terms 2/10, n/60. The goods cost Allied $12,000. May 7 Macy returns 100 units because they did not fit the customer's needs (invoice amount: $1,600). Allied restores the units, which cost $1,200, to its inventory. May 8 Macy discovers that 100 units are scuffed but are still of use and, therefore, keeps the units. Allied gives al price reduction (allowance) and credits Macy's accounts receivable for $800 to compensate for the damage. Allied receives payment from Macy for the amount owed on the May 5 purchase; payment is net of returns, allowances, and any cash discount. May 15 21 Use the above informations, analyze each transaction by indicating its effects on the income statement-specifically, identify the accounts and amounts (including + or -) for each transaction. May 3 May 5 Income Statement Components Increase or Decrease May 7 Increase or Decrease Increase or Decrease Amount Amount Amount Sales Sales discounts Sales returns and allowances Net sales Cost of goods sold Gross profit ces May 8 Increase or Decrease Amount May 15 Increase or Decrease Amount
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