(Solved): Exercise 4-4 Recording sales, sales returns, and sales allowances LO P2 Prepare journal entries to ...

Exercise 4-4 Recording sales, sales returns, and sales allowances LO P2 Prepare journal entries to record the following transactions for Alled assuming it uses a perpetual inventory system and the gross method. (Allied estimates returns using an adjusting entry at each year-end.) IN 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 unita 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: $21,000) to Macy Co. under credit terms 2/10, n/60. The goods cost Allied $15,000. 7 Macy returns 125 units because they did not fit the customer's needs (invoice amount: $1,750). Allied restores the units, which coat $1,250, to its inventory. Macy discovers that 200 units are souffed but are atill of use and, therefore, keeps the units. Allied sends Macy a credit memorandum for $300 toward the original invoice amount to compensate for the danage. 15 Allied receives payment from Macy for the amount owed on the May 3 purchase; payment is net of returns, allowances, and any cash discount. N View transaction list View journal entry worksheet No 1 2 3 Date May 03 May 05 May 05 Merchandise inventory Cash Accounts receivable Sales Cost of goods sold Merchandise inventory General Journal Prev 8 of 7 Debit 20,000 21,000 Credit 20,000 21,000 Next >