Spare Parts was organized on May 1, 2011, and made its first purchase of merchandise on May 3. The purchase was for 2,000 units at a price of $9 per unit. On May 5, Spare Parts sold 1,200 of the units for $13 per unit to DeSoto Co. Terms of the sale were 2/10, n/60. a. On May 7, DeSoto returns 420 units because they did not fit the customer's needs. Spare Parts restores the units to its inventory. b. On May 8, DeSoto discovers that 100 units are damaged but are still of some use and, therefore, keeps the units. Spare Parts sends DeSoto a credit memorandum for $500 to compensate for the damage. c. On May 15, DeSoto discovers that 120 units are the wrong color. DeSoto keeps 72 of these units because Spare Parts sends a $140 credit memorandum to compensate. DeSoto returns the remaining 48 units to Spare Parts. Spare Parts restores the 48 returned units to its inventory. Prepare entries for Spare Parts to record the May 5 sale and each of the above separate transactions a through c using a perpetual inventory system.

Spare Parts was organized on May 1, 2011, and made its first purchase of merchandise on May 3. The purchase was for 2,000 units at a price of $9 per unit. On May 5, Spare Parts sold 1,200 of the units for $13 per unit to DeSoto Co. Terms of the sale were 2/10, n/60.

    

a.	On May 7, DeSoto returns 420 units because they did not fit the customer's needs. Spare Parts restores the units to its inventory.
b.	On May 8, DeSoto discovers that 100 units are damaged but are still of some use and, therefore, keeps the units. Spare Parts sends DeSoto a credit memorandum for $500 to compensate for the damage.
c.	On May 15, DeSoto discovers that 120 units are the wrong color. DeSoto keeps 72 of these units because Spare Parts sends a $140 credit memorandum to compensate. DeSoto returns the remaining 48 units to Spare Parts. Spare Parts restores the 48 returned units to its inventory.

     

Prepare entries for Spare Parts to record the May 5 sale and each of the above separate transactions a through c using a perpetual inventory system.

 

Explanation:

May 5:

Sold merchandise on credit (1,200 × $13) = $15,600

To record cost of sale (1,200 × $9) = $10,800

May 7:

Accepted a return from a customer (420 × $13) = $5,460

Returned merchandise to inventory (420 × $9) = $3,780

May 15:

Accepted return from a customer (48 × $13) = $624

Returned merchandise to inventory (48 × $9) = $432