Uddin Publishing Co. publishes college textbooks that are sold to bookstores on

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 63 days after shipment. The retailer may return a maximum of 29% 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 9%, and the average collection period is 71 days. In October, $2,270,000 of the invoiced July sales were returned according to the return policy, and the remaining $11,730,000 was paid. Prepare the entries for the return and payment. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Account Titles and Explanation

Debit

Credit

(To record the return.)

(To record the payment.)

Account Titles and Explanation

Debit

Credit

(To record the return.)

(To record the payment.)

Explanation / Answer

In the books of Uddin publishing co.

Sales Return a/s Dr 2270000

Retailer Receivable a/c 2270000

(Being goods return from retailer which was sold to him)

Cash a/c Dr 11730000

To Retailer receivable a/c 11730000

(Being casgh received from the retailer for the goods sold on credit)

In the books of retailer

Uddin publishing Co(payable) 2270000

To purchase Return 2270000

(Being books returned to Uddin publishing co.)

Uddin publishing Co a/c(Payable)a/c Dr 11730000

To Cash a/c 11730000

(Being cash paid to uddin Publishing co for the purchases made)

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