Question:

Dement Publishing Division

The DeMent Publishing Division sells large volumes of novels to a few book distributors, which in turn sell to several national chains of bookstores. DeMent allows distributors to return up to 30% of sales, and distributors give the same terms to bookstores. While returns from individual titles fluctuate greatly, the returns from distributors have averaged 20% in each of the past 5 years. A total of $7,000,000 of paperback novel sales was made to distributors through fiscal 20Y4. On November 30, 20Y4 (the end of the fiscal year), $1,500,000 of fiscal 20Y4 sales were still subject to return privileges over the next 6 months. The residual $5,500,000 of fiscal 20Y4 sales had actual returns of 21percent. Sales from fiscal 20Y3 totaling $2,000,000 was collected in fiscal 20Y4 less 18percent returns. This division records revenue according to the technique referred to as revenue recognition when the right of return exists.

Revenue to be recognized in 20Y4: ______________________________