Reference no: EM132550386

Question - 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 $8 cash per unit (for a total cost of $16,000).  5 Allied sold 1,000 of the units in inventory for $12 per unit (invoice total: $12,000) to Macy Co. under credit terms 2/10, n/60. The goods cost Allied $8,000.  7 Macy returns 100 units because they did not fit the customer's needs (invoice amount: $1,200). Allied restores the units, which cost $800, to its inventory.  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 $400 to compensate for the damage.  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.

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