Question

Exercise 18-21 ce Pharoah 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. On July 1, 2020, Pharoah shipped books invoiced at $16,000,000 (cost $12,800,000). 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 Credit (To recepireren) (Tored ost of goods soll.) SHOW LIST OF ACCOUNTS On October 3, 2020, $1,600,000 of the invoiced July sales were returned according to the return policy, and the remaining $14,400,000 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.) Debit Credit Account Titles and Explanation Oct. 3, 2020 (Te record the retum (Te record cost of goods returned (Te record the payment SHOW LIST OF ACCOUNTS

Answer 1

Ansceen Account withes and Explanation Debit($) Credit (6) 1600900 Accounts receivable To sales devenue to recognize revenue) 16000,000 July 2020 Cost of goods sold 08 (2800.000 To Inventezy co Cost of goods sold) .) 12809000 1600000 Oct, 3 sales return and allowances To Accounts releivable Cr to acord retum 1600ooo 128000 e Inventory Alc (To Cast of goods sold) 112800,00 x 160000] 16000,oo 1280000 found to record Cast of goods returned) 14400000 Cash Ale Dr To Accounts receivable [to second payment? 14,400.000