[The following information applies to the questions displayed below.] Allied Merchandisers was organized on May 1. Macy Company is a major customer (buyer) of Allied (seller) products. May 3Allied made its first and only purchase of inventory for the period on May 3 for 3,000 units at a price of $9 cash per unit (for a total cost of $27,000).May 5Allied sold 1,500 of the units in inventory for $13 per unit (invoice total: $19,500) to Macy Company under credit terms 2/10, n/60. The goods cost Allied $13,500.May 7Macy returns 150 units because they did not fit the customer’s needs (invoice amount: $1,950). Allied restores the units, which cost $1,350, to its inventory.May 8Macy discovers that 150 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 $750 to compensate for the damage.May 15Allied receives payment from Macy for the amount owed on the May 5 purchase; payment is net of returns, allowances, and any cash discount. Prepare journal entries to record the following transactions for Allied assuming it uses a perpetual inventory system and the gross method.

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Chapter7: Inventories

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[The following information applies to the questions displayed below.]

Allied Merchandisers was organized on May 1. Macy Company 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 3,000 units at a price of $9 cash per unit (for a total cost of $27,000).
May 5	Allied sold 1,500 of the units in inventory for $13 per unit (invoice total: $19,500) to Macy Company under credit terms 2/10, n/60. The goods cost Allied $13,500.
May 7	Macy returns 150 units because they did not fit the customer’s needs (invoice amount: $1,950). Allied restores the units, which cost $1,350, to its inventory.
May 8	Macy discovers that 150 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 $750 to compensate for the damage.
May 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.

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

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Explanation -

Journal Entries -

Journal Entries are the records of the transactions entered into by the company. All the transactions are recorded using debit and credit. Once all the transactions are recorded they are posted to the T-Accounts.

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