Allied made its first and only purchase of inventory for the period on May 3 for 1,000 units at a price of $11 cash per unit (for a total cost of $11,000).

Prepare journal entries to record each of the following sales transactions of a merchandising company. The company uses a perpetual inventory system and the gross method.

Apr.		1		Sold merchandise for $5,800, with credit terms n/30; invoice dated April 1. The cost of the merchandise is $3,480.
Apr.		4		The customer in the April 1 sale returned $660 of merchandise for full credit. The merchandise, which had cost $396, is returned to inventory.
Apr.		8		Sold merchandise for $2,400, with credit terms of 1/10, n/30; invoice dated April 8. Cost of the merchandise is $1,680.
Apr.		11		Received payment for the amount due from the April 1 sale less the return on April 4.

No	Date	General Journal	Debit	Credit
1	Apr 01	Accounts receivableselected answer correct	5,800selected answer correct	not attempted
		Salesselected answer correct	not attempted	5,800selected answer correct
2	Apr 01	Cost of goods soldselected answer correct	3,480selected answer correct	not attempted
		Merchandise inventoryselected answer correct	not attempted	3,480selected answer correct
3	Apr 04	Sales returns and allowancesselected answer correct	660selected answer correct	not attempted
		Accounts receivableselected answer correct	not attempted	660selected answer correct
4	Apr 04	Merchandise inventoryselected answer correct	396selected answer correct	not attempted
		Cost of goods soldselected answer correct	not attempted	396selected answer correct
5	Apr 08	Accounts receivableselected answer correct	2,400selected answer correct	not attempted
		Salesselected answer correct	not attempted	2,400selected answer correct
6	Apr 08	Cost of goods soldselected answer correct	1,680selected answer correct	not attempted
		Merchandise inventoryselected answer correct	not attempted	1,680selected answer correct
7	Apr 11	Cashselected answer correct	5,140selected answer correct	not attempted
		Accounts receivable 5800-660selected answer correct	not attempted	5,140selected answer correct

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7.

Use the following information for the Exercises below.

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 1,000 units at a price of $11 cash per unit (for a total cost of $11,000).
		5		Allied sold 500 of the units in inventory for $15 per unit (invoice total: $7,500) to Macy Co. under credit terms 2/10, n/60. The goods cost Allied $5,500.
		7		Macy returns 50 units because they did not fit the customer’s needs (invoice amount: $750). Allied restores the units, which cost $550, to its inventory.
		8		Macy discovers that 50 units are scuffed but are still of use and, therefore, keeps the units. Allied sends Macy a credit memorandum for $350 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.)

No	Date	General Journal	Debit	Credit
1	May 03	Merchandise inventoryselected answer correct	11,000selected answer correct	not attempted
		Cashselected answer correct	not attempted	11,000selected answer correct
2	May 05	Accounts receivableselected answer correct	7,500selected answer correct	not attempted
		Salesselected answer correct	not attempted	7,500selected answer correct
3	May 05	Cost of goods soldselected answer correct	5,500selected answer correct	not attempted
		Merchandise inventoryselected answer correct	not attempted	5,500selected answer correct
4	May 07	Sales returns and allowancesselected answer correct	750selected answer correct	not attempted
		Accounts receivableselected answer correct	not attempted	750selected answer correct
5	May 07	Merchandise inventoryselected answer correct	550selected answer correct	not attempted
		Cost of goods soldselected answer correct	not attempted	550selected answer correct
6	May 08	Sales returns and allowancesselected answer correct	350selected answer correct	not attempted
		Accounts receivableselected answer correct	not attempted	350selected answer correct
7	May 15	Cashselected answer correct	6,272selected answer correct	not attempted
		Sales discounts 2% of 6400selected answer correct	128selected answer correct	not attempted
		Accounts receivable 7500-750-350selected answer correct	not attempted	6,400