Uddin Publishing Co. publishes college textbooks that are sold to bookstores on
ID: 2425890 • Letter: U
Question
Uddin Publishing Co. publishes college textbooks that are sold to bookstores on the following terms. Each title has a fixed wholesale price, terms f.o.b. shipping point, and payment is due 56 days after shipment. The retailer may return a maximum of 35% of an order at the retailer’s expense. Sales are made only to retailers who have good credit ratings. Past experience indicates that the normal return rate is 12%, and the average collection period is 79 days.
n late July, Uddin shipped books invoiced at $14,200,000. Prepare the journal entry to record this event that best conforms to GAAP.
In October, $2,390,000 of the invoiced July sales were returned according to the return policy, and the remaining $11,810,000 was paid. Prepare the entries for the return and payment
Explanation / Answer
July
Debtors a/c Dr 14200000
To sales a/c 14200000
October
Cash/Bank a/c Dr 11810000
Sales returns a/c Dr 2390000
To Debtors a/c 14200000
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