Yes, that is an update to the existing blog and I am sure it is as a result of the discussions on this forum.
And yes, it is total bs.
1. If they are going to reverse course and do cash accounting for product sales to Wal-Mart, Best Buy, etc., then they need to go back and restate the financials for at least fiscal year end 2014 and 2015 and Q1 2016.
2. Other merchants that sell to Wal-Mart, etc. on a consignment basis, recognize sales once the product is shipped. The sale is recorded and a reserve against A/R is set up which is an estimate of the how much is typically returned. The actual returns during a quarter and then deducted from gross revenue on the income statement.
3. For every sale, a certain amount of that sale should be reserved for returns.
It is not rocket science and I would proffer that the vast number of merchants selling to the big box chains do as I described.
In reality, it just goes to show how screwed up HHSE's accounting system is and also verifies that they have not engaged an auditor.
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