Fit for life foods reports the following income statement

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Q1. 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 $8 cash per unit (for a total cost of $8,000).
• May 5: Allied sold 500 of the units in inventory for $12 per unit (invoice total: $6,000) to Macy Co. under credit terms 2/10, n/60. The goods cost Allied $4,000.
• May 7: Macy returns 50 units because they did not fit the customer’s needs (invoice amount: $600). Allied restores the units, which cost $400, to its inventory.
• May 8: Macy discovers that 50 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 $200 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.

Prepare journal entries to record the following transactions for Allied assuming it uses a perpetual inventory system and the gross method.

Q2. 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 $8 cash per unit (for a total cost of $8,000).
• May 5: Allied sold 500 of the units in inventory for $12 per unit (invoice total: $6,000) to Macy Co. under credit terms 2/10, n/60. The goods cost Allied $4,000.
• May 7: Macy returns 50 units because they did not fit the customer’s needs (invoice amount: $600). Allied restores the units, which cost $400, to its inventory.
• May 8: Macy discovers that 50 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 $200 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.

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.)

Q3. Santa Fe Retailing purchased merchandise “as is” (with no returns) from Mesa Wholesalers with credit terms of 2/10, n/60 and an invoice price of $23,800. The merchandise had cost Mesa $16,232. Assume that both buyer and seller use a perpetual inventory system and the gross method.

1. Prepare entries that the buyer records for the (a) purchase, (b) cash payment within the discount period, and (c) cash payment after the discount period.

Q4. Sydney Retailing (buyer) and Troy Wholesalers (seller) enter into the following transactions.

(Both Sydney and Troy use a perpetual inventory system and the gross method.)

1. Prepare journal entries that Sydney Retailing (buyer) records for these three transactions.

2. Prepare journal entries that Troy Wholesalers (seller) records for these three transactions.

Q5. Fit-for-Life Foods reports the following income statement accounts for the year ended December 31.

Prepare a multiple-step income statement.