Allied Merchandisers was organized on May 1. Macy Co 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 $10 cash per unit (for a total cost of $20,000) 5 Allied sold 1,500 of the units in inventory for $14 per unit (invoice total: S21,000) to Macy Co. under credit terms 2/10, n/60. The goods cost Allied $15,000 7 Macy eturns 125 units because they did not fit the customer's needs (invoice amount: $1,750) Allied restores the units, which cost $1,250, to its inventory Macy discovers that 200 units are scuffed but are still of use and, therefore, keeps the units Allied send Macy a it memorandum for $300 toward the original invoice amount to compensate for the damage the May 5 purchase 15 Allied receives payment from Macy or the amount owed on payment is net of returns, allowances, and any cash discount
Prepare journal entries to record the following transactions lied estimates returns using an adjusting entry at each year-end.)
Merchandise inventory 20000
Cash 20000
Accounts receivable 21000
Sales 210000

Question

10-07-2020
Business

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Allied Merchandisers was organized on May 1. Macy Co 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 $10 cash per unit (for a total cost of $20,000) 5 Allied sold 1,500 of the units in inventory for $14 per unit (invoice total: S21,000) to Macy Co. under credit terms 2/10, n/60. The goods cost Allied $15,000 7 Macy eturns 125 units because they did not fit the customer's needs (invoice amount: $1,750) Allied restores the units, which cost $1,250, to its inventory Macy discovers that 200 units are scuffed but are still of use and, therefore, keeps the units Allied send Macy a it memorandum for $300 toward the original invoice amount to compensate for the damage the May 5 purchase 15 Allied receives payment from Macy or the amount owed on payment is net of returns, allowances, and any cash discount
Prepare journal entries to record the following transactions lied estimates returns using an adjusting entry at each year-end.)
Merchandise inventory 20000
Cash 20000
Accounts receivable 21000
Sales 210000

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anthougo anthougo · Answer 1 · 2020-07-12T04:25:12+02:00

Answer:

Allied Merchandisers:

General Journal:

May 3:

Debit Inventory $20,000

Credit Cash Account $20,000

To record the purchase of inventory.

May 5:

Debit Accounts Receivable (Macy Co.) $21,000

Credit Sales Revenue $21,000

To record the sale of goods, terms 2/10, n/60.

Debit Cost of Goods Sold $15,000

Credit Inventory $15,000

To record the cost of goods sold.

May 7:

Debit Sales Returns $1,750

Credit Accounts Receivable (Marcy Co.) $1,750

To record the return of 125 units.

Debit Inventory $1,750

Credit Cost of goods sold $1,750

To record the return of goods.

Debit Inventory $1,250

Credit Cash Account $1,250

To record the cost of restoring the units.

Debit Allowance for Inventory Damage $300

Credit Accounts Receivable (Marcy Co.) $300

To record the allowance for inventory damage.

May 15:

Debit Cash Account $18,571

Debit Cash Discount $379

Credit Accounts Receivable (Marcy Co.) $18,950

To record cash receipt.

Explanation:

Journal entries are the initial records of business transactions. They show the accounts debited and credited for each transaction. They also indicate how they will be posted to the general ledger.