Required information Use the following information for the Exercises below. (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 2,000 units at a price of $10 cash per unit (for a total cost of $20,000). May 5 Allied sold 1,000 of the units in inventory for $14 per unit (invoice total: $14,000) to Macy Company under credit terms 2/10, n/60. The goods cost Allied $10,000. May 7 Macy returns 100 units because they did not fit the customer's needs (invoice amount: $1,400). Allied restores the units, which cost $1,000, to its inventory. May 8 Macy discovers that 100 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 $600 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. Exercise 5-6 (Algo) Recording sales, sales returns, and sales allowances LO P2 Prepare journal entries to record the following transactions for Allied assuming it uses a perpetual inventory system and the gross method. View transaction list Journal entry worksheet Record the cost of goods sold. Note: Enter debits before credits. Date General Journal Debit Credit May 05 21,000 Accounts payable Merchandise inventory 21,000 Record entry Clear entry View general journal Journal entry worksheet 1 2 3 4 5 7 Macy returns 100 units because they did not fit the customer's needs (invoice amount: $1,400). Note: Enter debits before credits. Date General Journal Debit Credit May 07 1,400 Accounts payable Merchandise inventory 1,400 Record entry Clear entry View general journal Journal entry worksheet Allied restores the units, which cost $1,000, to its inventory. Note: Enter debits before credits. Date General Journal Debit Credit May 07 Record entry Clear entry View general journal Journal entry worksheet 1 2 3 4 5 6 7 > Macy discovers that 100 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 $600 to compensate for the damage. Note: Enter debits before credits. Date General Journal Debit Credit May 08 600 Accounts payable Merchandise inventory 600 Record entry Clear entry View general journal Journal entry worksheet