On July 10, 2020, Pharoah Music sold CDs to retailers on account and recorded sales revenue of $665,000 (cost $478,800). Pharoah 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 Pharoah and were granted credit of $79,300. Prepare Pharoah’s journal entries to record (a) the sale on July 10, 2020, and (b) $79,300 of returns on October 11, 2020, and on October 31, 2020. Assume that Pharoah prepares financial statement on October 31, 2020. (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 0 for the amounts.)
On July 10, 2020, Pharoah Music sold CDs to retailers on account and recorded sales revenue of $665,000 (cost $478,800). Pharoah 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 Pharoah and were granted credit of $79,300.
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