Common Contracts

Contract

December 2nd, 2014

• Filed
  December 2nd, 2014

of paperback books returned within the spec- ified statutory merchandise return period of 4 months and 15 days. P and D, a distributor, agree that P shall provide D with a full re- fund for paperback books that D purchases from P and is unable to resell, provided the merchandise is returned to P within four months following the original sale. The agreement constitutes a legal obligation. The agreement provides that D’s return of the covers of paperback books within the first four months following their sale con- stitutes satisfactory evidence that D has not resold and will not resell the paperback books. During P’s 1989 taxable year, pursuant to the agreement, P sells D 500 paperback books for $1 each. In 1990, during the mer- chandise return period, D returns covers from 100 unsold paperback books rep- resenting $100 of P’s 1989 sales of paperback books. P’s cost attributable to the returned books is $25. No adjustment to cost of goods sold is required under paragraph (g)(1) of this s