Metropolis Books sold 50,000 copies of a best-selling novel in July for $8 each. Included in each book was a $2 mail-in rebate if the customer sends in proof of purchase with a completed rebate form. Metropolis estimates that 10% of the purchasers will claim the rebate.
(a) Calculate the net sales revenue Metropolis earned in July on this book.
(b) Prepare an adjusting entry at July 31 to accrue the estimated rebate liability.
(c) Assume in August that 1,000 rebate forms are received and processed. Prepare one journal entry to record processing the rebate forms.