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 $10 cash per unit (for a total cost of $20,000) 5 Allied sold 1,500 of the units in inventory for $14 per unit (invoice total: S21,000) to Macy Co. under credit terms 2/10, n/60. The goods cost Allied $15,000 7 Macy eturns 125 units because they did not fit the customer's needs (invoice amount: $1,750) Allied restores the units, which cost $1,250, to its inventory Macy discovers that 200 units are scuffed but are still of use and, therefore, keeps the units Allied send Macy a it memorandum for $300 toward the original invoice amount to compensate for the damage the May 5 purchase 15 Allied receives payment from Macy or the amount owed on payment is net of returns, allowances, and any cash discount Prepare journal entries to record the following transactions lied estimates returns using an adjusting entry at each year-end.)
Merchandise inventory 20000
Cash 20000
Accounts receivable 21000
Sales 210000