Concept explainers
Exercise 5-6
Recording purchase returns and allowances PI
Refer to Exercise 5-5 and prepare the appropriate
Exercise 5-5
Recording sales returns and allowances P2
Check (1) Dr. Merchandise Inventory $400
Allied Parts was organized on May 1, 2015, and made its first purchase of merchandise on May 3. The purchase was for 2,000 units at a price of S10 per unit. On May 5. Allied Parts sold 1.500 of the units for $14 per unit to Baker Co. Terms of the sale were 2/10, n/60. Prepare entries for Allied Parts to record the May 5 sale and each of the following separate transactions a through c using a perpetual inventory system.
- On May 7, Baker returns 200 units because they did not fit the customer’s needs. Allied Parts restores the units to its inventory.
- On May 8. Baker discovers that 300 units are damaged but are still of some use and. therefore, keeps the units. Allied Parts sends Baker a credit memorandum for $600 to compensate for the damage.
- On May 15, Baker discovers that 100 units are the wrong color. Baker keeps 60 of these units because Allied Parts sends a $120 credit memorandum to compensate. Baker returns the remaining 40 units to Allied Parts. Allied Parts restores the 40 returned units to its inventory.
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Chapter 5 Solutions
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