Problem:
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 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%, and the average collection period is 72 days.
Q1. In late July, Uddin shipped books invoiced at $15,229,100. Prepare the journal entries to record this event that best conforms to generally accepted accounting principles.
Q2. In October, $2,108,700 of the invoiced July sales were returned according to the return policy, and the remaining $13,120,400 was paid. Prepare the entries recording the return and payment.