On July 10, 2020, Amodt Music sold CDs to retailers on account and recorded sales revenue of $700,000 (cost $560,000). Amodt 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, 2020, retailers returned CDs to Amodt and were granted credit of $78,000. Prepare Amodt's journal entries to record (a) the sale on July 10, 2020, and (b) $78,000 of returns on October 11, 2020, and on October 31, 2020. Assume that Amodt prepares financial statement on October 31, 2020.
On July 10, 2020, Amodt Music sold CDs to retailers on account and recorded sales revenue of $700,000 (cost $560,000). Amodt 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, 2020, retailers returned CDs to Amodt and were granted credit of $78,000. Prepare Amodt's journal entries to record (a) the sale on July 10, 2020, and (b) $78,000 of returns on October 11, 2020, and on October 31, 2020. Assume that Amodt prepares financial statement on October 31, 2020.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On July 10, 2020, Amodt Music sold CDs to retailers on account and recorded sales revenue of $700,000 (cost $560,000). Amodt 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, 2020, retailers returned CDs to Amodt and were granted credit of $78,000. Prepare Amodt's
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