Sweet 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 12%. The costs of recovery are expected to be immaterial, and the textbooks are expected to be resold at a profit. Assume Sweet prepares financial statements on October 31, 2020, the close of the fiscal year. No other returns are anticipated. Indicate the amounts reported on the income statement and balance related to the above transactions. **Journal Entry for Book Shipment Transaction***Date:* July 1, 2020*Transaction Overview:* Sweet shipped books with an invoice amount of $16,600,000. The cost of the books was $13,280,000. Below are the journal entries to appropriately record the transaction.**Journal Entries:**1. **To Recognize Revenue:** - **Accounts Receivable** - *Debit:* $16,600,000 - Explanation: This entry records the amount expected to be received from the customer. - **Sales Revenue** - *Credit:* $16,600,000 - Explanation: This entry recognizes the revenue earned from the sale of books.2. **To Record Cost of Goods Sold:** - **Cost of Goods Sold** - *Debit:* $13,280,000 - Explanation: This entry records the cost associated with the goods that have been sold. - **Inventory** - *Credit:* $13,280,000 - Explanation: This entry reduces the inventory to account for the goods that have been shipped.**Notes:**- These entries ensure that both the revenue from the sale and the cost of the goods sold are accurately recorded, reflecting their impact on the financial statements.- Credit account titles are automatically indented when an amount is entered. No manual indentation is required. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. **Journal Entries for Return and Payment**_Date: October 3, 2020_**Context:** On October 3, 2020, $1,660,000 of the invoiced July sales were returned according to the return policy, and the remaining $14,940,000 was paid. The following journal entries are prepared for the return and payment:1. **To record the return:** - **Debit:** Sales Returns and Allowances — $1,660,000 - **Credit:** Accounts Receivable — $1,660,0002. **To record the cost of goods returned:** - **Debit:** Returned Inventory — $1,328,000 - **Credit:** Cost of Goods Sold — $1,328,0003. **To record the payment received:** - **Debit:** Cash — $14,940,000 - **Credit:** Accounts Receivable — $14,940,000**Note:** Credit account titles are automatically indented when the 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.

Sales returns is the amount or value of goods that are being returned by the customer on account of content or quality issue or due to any other reason. This reduces gross value of sales and also accounts receivables balance also got reduced due to this returns.Required financial statement reporting is: As all accounts receivables have paid their due amount, so their balance as on Oct 31,2020 is zero and no amount will be reported in balance sheet related to this sale.