Sweet 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 60 days after shipment. The retailer may return a maximum of 30% 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%. The costs of recovery are expected to be immaterial, and the textbooks are expected to be resold at a profit. Assume Sweet prepares financial statements on October 31, 2020, the close of the fiscal year. No other returns are anticipated. Indicate the amounts reported on the income statement and balance related to the above transactions. On July 1, 2020, Sweet shipped books invoiced at $16,600,000 (cost $13,280,000). Prepare the journal entry to record thistransaction. (Credit account titles are automatically indented when amount is entered. Do not indent manually.If no entry is required,select "No entry" for the account titles and enter O for the amounts.)Account Titles and ExplanationDebitCreditAccounts Receivable16600000Sales Revenue16600000(To recognize revenue.)Cost of Goods Sold13280000Inventory13280000(To record cost of goods sold.) On October 3, 2020, $1,660,000 of the invoiced July sales were returned according to the return policy, and the remaining$14,940,000 was paid. Prepare the journal entries for the return and payment. (Credit account titles are automatically indentedwhen amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for theamounts.)DateAccount Titles and ExplanationDebitCreditOct. 3.Sales Returns and Allowances16600002020Accounts Receivable1660000(To record the return)Returned Inventory1328000Cost of Goods Sold1328000(To record cost of goods returned)Cash14940000Accounts Receivable14940000

Sales returns is the amount or value of goods that are being returned by the customer on account of…

Answered: weet Publishing Co. publishes college…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter8: Current And Contingent Liabilities

Section: Chapter Questions

Problem 3MCQ

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Sweet 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 60 days after shipment. The retailer may return a maximum of 30% 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%. The costs of recovery are expected to be immaterial, and the textbooks are expected to be resold at a profit.

Assume Sweet prepares financial statements on October 31, 2020, the close of the fiscal year. No other returns are anticipated. Indicate the amounts reported on the income statement and balance related to the above transactions.

On July 1, 2020, Sweet shipped books invoiced at $16,600,000 (cost $13,280,000). Prepare the journal entry to record this
transaction. (Credit account titles are automatically indented when amount is entered. Do not indent manually.If no entry is required,
select "No entry" for the account titles and enter O for the amounts.)
Account Titles and Explanation
Debit
Credit
Accounts Receivable
16600000
Sales Revenue
16600000
(To recognize revenue.)
Cost of Goods Sold
13280000
Inventory
13280000
(To record cost of goods sold.)

On October 3, 2020, $1,660,000 of the invoiced July sales were returned according to the return policy, and the remaining
$14,940,000 was paid. Prepare the journal entries for the return and payment. (Credit account titles are automatically indented
when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the
amounts.)
Date
Account Titles and Explanation
Debit
Credit
Oct. 3.
Sales Returns and Allowances
1660000
2020
Accounts Receivable
1660000
(To record the return)
Returned Inventory
1328000
Cost of Goods Sold
1328000
(To record cost of goods returned)
Cash
14940000
Accounts Receivable
14940000

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