Financial Accounting > EXAM > ACCT 211 Comprehensive Chapter 4 & 5 Exercises (All)

ACCT 211 Comprehensive Chapter 4 & 5 Exercises

Document Content and Description Below

Chapter 4 Exercises 1. 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 t... he 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 the appropriate journal entries for Macy Co. to record each of the May transactions. Macy is a retailer that uses the gross method and a perpetual inventory system, and purchases these units for resale. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Explanation May 7: Returned unwanted merchandise. (100 units x $15) = $1,500. May 15: Accounts payable paid for May 5 purchase less R&A. ($15,000 – $1,500 – $700) = $12,800. May 15: Merchandise inventory paid for May 5 purchase less R&A. ($15,000 – $1,500 – $700) x 2% = $256. [Show More]

Last updated: 2 years ago

Preview 1 out of 69 pages

Buy Now

Instant download

We Accept: