Journal Entries Allied Merchandisers was organized on May 1. Macy Company is a major customer (buyer) of Allied (seller) products. May Allied made its first and only purchase of inventory for the period on May 3 for 3,000 units at a price of $8 cash 3 per unit (for a total cost of $24,000). May Allied sold 1,500 of the units in inventory for $12 per unit (invoice total: $18,000) to Macy Company under credit 5 terms 2/10, n/60. The goods cost Allied $12,000. May Macy returns 150 units because they did not fit the customer's needs (invoice amount: $1,800). Allied restores 7 the units, which cost $1,200, to its inventory. May Macy discovers that 150 units are scuffed but are still of use and, therefore, keeps the units. Allied gives a price 8 reduction (allowance) and credits Macy's accounts receivable for $600 to compensate for the damage. May Allied receives payment from Macy for the amount owed on the May 5 purchase; payment is net of returns, 15 allowances, and any cash discount.

Journal Entries Allied Merchandisers was organized on May 1. Macy Company is a major customer (buyer) of Allied (seller) products. May Allied made its first and only purchase of inventory for the period on May 3 for 3,000 units at a price of $8 cash 3 per unit (for a total cost of $24,000). May Allied sold 1,500 of the units in inventory for $12 per unit (invoice total: $18,000) to Macy Company under credit 5 terms 2/10, n/60. The goods cost Allied $12,000. May Macy returns 150 units because they did not fit the customer's needs (invoice amount: $1,800). Allied restores 7 the units, which cost $1,200, to its inventory. May Macy discovers that 150 units are scuffed but are still of use and, therefore, keeps the units. Allied gives a price 8 reduction (allowance) and credits Macy's accounts receivable for $600 to compensate for the damage. May Allied receives payment from Macy for the amount owed on the May 5 purchase; payment is net of returns, 15 allowances, and any cash discount.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter6: Cost Of Goods Sold And Inventory

Section: Chapter Questions

Problem 51E: Inventory Costing Methods On June 1, Welding Products Company had a beginning inventory of 210 cases...

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