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Question - On July 10, 2017, Carla Music sold CDs to retailers on account and recorded sales revenue of $749,000 (cost $584,220). Carla grants the right to return CDs that do not sell in 3 months following delivery. Past experience indicates that the normal return rate is 15%. By October 11, 2017, retailers returned CDs to Carla and were granted credit of $78,300.
Prepare Carla's journal entries to record (a) the sale on July 10, 2017, and (b) $78,300 of returns on October 11, 2017, and on October 31, 2017. Assume that Carla prepares financial statement on October 31, 2017.
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