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 $11 cash per unit (for a total cost of $22,000).
5 Allied sold 1,000 of the units in inventory for $15 per unit (invoice total: $15,000) to Macy Co. under credit terms 2/10, n/60. The goods cost Allied $11,000.
7 Macy returns 100 units because they did not fit the customer’s needs (invoice amount: $1,500). Allied restores the units, which cost $1,100, to its inventory.
8 Macy discovers that 100 units are scuffed but are still of use and, therefore, keeps the units. Allied sends Macy a credit memorandum for $700 toward the original invoice amount 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.
Prepare journal entries to record the following transactions for Allied assuming it uses a perpetual inventory system and the gross method. (Allied estimates returns using an adjusting entry at each year-end.)
Explanation
May 3: Purchased goods. (2,000 units x $11). = $22,000.
May 5: Sold goods on credit. (1,000 units x $15). = $15,000.
May 5: Record cost of sale. (1,000 units x $11). = $11,000.
May 7: Accepted returns. (100 units x $15). = $1,500.
May 7: Returned goods to inventory. (100 units x $11). = $1,100.
May 15: Sales discount received payment within discount period. ($15,000 – $1,500 – $700) x 2% = $256.
May 15: Accounts receivable balance as of May 15. ($15,000 – $1,500 – $700) = $12,800.
MAY 15TH HOW DID YOU GET , 12, 544?
ReplyDeleteThe total end price after returns then 2% multiplied by that amount gives you cash discount per original agreement. still put full amount in credit column
Deleteit's not right
Deletei am really thankful for this. thank you for your help, kind of copy the accounts, but changed the amounts. thank you again.
ReplyDeletemy daughter needed this and used my account at the same time hehe.
Deleteto reduce the cost on may 7th, why do you debit the merchandise inv. (asset) and credit the costs of good sold (expense)? why dont you credit the asset and debit the expense?
ReplyDelete