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Question - Sunland 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 11%. The costs of recovery are expected to be immaterial, and the textbooks are expected to be resold at a profit.
Required - On October 3, 2017, $1,500,000 of the invoiced July sales were returned according to the return policy, and the remaining $13,500,000 was paid. Prepare the journal entries for the return and payment.
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