Response to the following problem:
During 2013, its first year of operations, Hollis Industries recorded sales of $10,600,000 and experienced returns of $860,000. Cost of goods sold totaled $7,950,000 (75% of sales). The company estimates that 10% of all sales will be returned.
Prepare the year-end adjusting journal entries to account for anticipated sales returns. (If no entry is required for a particular event, select "No journal entry required" in the first account field.)
Record the anticipated sales returns.
Record estimated return of inventory.