Use the information in PA6-1 to complete the following requirements.
Info PA6-1
a. New Books sold merchandise to Readers€™ Corner at a selling price of $ 550,000. The merchandise had cost New Books $ 415,000.
b. Two days later, Readers€™ Corner complained to New Books that some of the merchandise differed from what Readers€™ Corner had ordered. New Books agreed to give an allowance of $ 10,000 to Readers€™ Corner.
c. Just three days later, Readers€™ Corner paid New Books, which settled all amounts owed.
Required:
1. For each of the events (a) through (c), indicate the amount and direction of the effect (+ for increase, €“ for decrease, and NE for no effect) on New Books in terms of the following items.

2. Which of the above items are likely to be reported on New Books€™ external financial statements, and which items will be combined €œbehind the scenes€?
3. Prepare the journal entries that New Books would record, and show any computations.

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Gross Revenues and Allowances Sales Discounts Net SalesGoods Sold Profit Sales Sales Returns Cost of