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.
On July 1, 2014, Uddin shipped books invoiced at $15,600,000 (cost $12,480,000). Prepare the journal entry to record this transaction. (calculate refund liability also)
On October 3, 2014, $1.5 million of the invoiced July sales were returned according to the return policy, and the remaining $14.10 was paid. Prepare the journal entries for the return and payment. (refund liability, received from debtors, estimated inventory returns)