Brief Exercise 18-13

On July 10, 2017, Carla Music sold CDs to retailers on account and recorded sales revenue of $657,000 (cost $538,740). Carla 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, 2017, retailers returned CDs to Carla and were granted credit of $84,200. Prepare Carlas journal entries to record (a) the sale on July 10, 2017, and (b) $84,200 of returns on October 11, 2017, and on October 31, 2017. Assume that Carla prepares financial statement on October 31, 2017.

Date No. Account Titles and Explanation (a) Jul. 10, 2017 (To record sales o record cost of goods sold) (b) Oct. 11, 2017 (To record sales returns) o record cost of goods returned Oct. 31, 2017 Debit Credit