Reserves for Sales Returns

3 Months Ended

Jun. 30, 2018

Reserves For Sales Returns

Reserves for sales Returns

NOTE 12 – RESERVE FOR SALES RETURNS

A return program for defective goods is negotiated with each of our wholesale customers on a year-to-year basis. Customers are either allowed to return defective goods within a specified period of time after shipment (between 6 and 9 months) or granted a “defective allowance” consisting of a fixed percentage (between 1% and 5%) off of invoice price in lieu of returning defective products. The Company generally does not allow products to be returned other than for defective goods or goods returned to the customer for various reasons however, the Company does make occasional exceptions to this policy and accordingly records a sales return reserve based on historic return amounts, specific events as identified and management estimates.

The Company records a sales reserve for its return goods programs at the time of sale for estimated sales returns that may occur. The liability for defective goods is included in reserve for sales returns on the condensed consolidated balance sheets.

Changes in the Company’s reserve for sales returns are presented in the following table:

	Three Months Ended
	June 30, 2018			June 30, 2017
Reserve for sales returns at beginning of the year	$	726,000		$	600,000	*
Provision for estimated sales returns		186,878			318,108
Sales returns received		(775,342	)		(656,899	)
Reserve for sales returns at end of the period	$	137,536		$	261,209

* The reserve for sales returns at the beginning of June 30, 2017 has been adjusted to reflect the full retrospective adoption of ASC 606 effective April 1, 2018.