On July 10, 2020, Buffalo Music sold CDs to retailers on account and recorded sales revenue of $740,000 (cost $621,600). Buffalo 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 Buffalo and were granted credit of $85,500. Prepare Buffalo’s journal entries to record (a) the sale on July 10, 2020, and (b) $85,500 of returns on October 11, 2020, and on October 31, 2020. Assume that Buffalo prepares financial statement on October 31, 2020.

On July 10, 2020, Buffalo Music sold CDs to retailers on account and recorded sales revenue of $740,000 (cost $621,600). Buffalo 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 Buffalo and were granted credit of $85,500. Prepare Buffalo’s journal entries to record (a) the sale on July 10, 2020, and (b) $85,500 of returns on October 11, 2020, and on October 31, 2020. Assume that Buffalo prepares financial statement on October 31, 2020.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter12: Current Liabilities

Section: Chapter Questions

Problem 3PB: Review the following transactions, and prepare any necessary journal entries for Sewing Masters Inc....

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