X Corporation has a generous return period for customers of its products. It reported net sales for 2018 and 2017 of $1,531,575 and $1,444,497, respectively, and reports the following in the notes to its financial statements.

a. What is the average rate of return that X Corp assumes in 2018? Is it different from that assumed in 2017?

b. How does the $19,907 differ from Allowance for Uncollectible Accounts in terms of where it appears in the balance sheet?

c. What does Deduction from Reserves represent? Assuming that all customers pay in cash, what is the journal entry associated with this amount?

d. The Gap reports that it records a right of return asset for merchandise we expect to receive back from customers. X Corp appears not to record such an asset. What does this suggest?

We accept sales returns during a 100-night trial period. Accrued sales returns represent a refund liability for the amount of consideration that we do not expect to be entitled to because it will be refunded to customers. The refund liability estimate is based on historical return rates and is adjusted for any current trends as appropriate. Each reporting period we remeasure the liability to reflect changes in the estimate, with a corresponding adjustment to net sales. The activity in the sales returns liability account for 2018 and 2017 was as follows (in thousands)