Novak 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. Your answer is correct. On July 1, 2020, Novak shipped books invoiced at $13,800,000 (cost $11,040,000). Prepare the journal entry to record this transaction. (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 for the amounts.) Account Titles and Explanation Debit Credit Accounts Receivable 13800000 Sales Revenue 13800000 (To recognize revenue.) Cost of Goods Sold 11040000 Inventory 11040000 (To record cost of goods sold.) Your answer is correct. On October 3, 2020, $1,380,000 of the invoiced July sales were returned according to the return policy, and the remaining $12,420,000 was paid. Prepare the journal entries for the return and payment. (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 O for the amounts.) Date Account Titles and Explanation Debit Credit Oct. 3, 2020 Sales Returns and Allowances 1380000 Accounts Receivable 1380000 (To record the return) Returned Inventory 1104000 Cost of Goods Sold 1104000 (To record cost of goods returned) Cash 12420000 Accounts Receivable 12420000 (To record the payment) Assume Novak 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 sheet related to the above transactions. (If answer is 0, please enter 0. Do not leave any fields blank.) Income Statement (partial) For the Year Ended October 31, 2020 Sales Revenue $ 13800000 Less Sales Returns and Allowances -1380000 i Net Sales 12420000 Cost of Goods Sold 9936000 Gross profit $ 2484000 Balance Sheet (partial) October 31, 2020 Accounts Receivable $ 0 Inventory 1104000