On July 10, 2017, Pearl Music sold CDs to retailers on account and recorded sales revenue of $658,000 (cost $506,660). Pearl grants the right to return CDs that do not sell in 3 months following delivery. Past experience indicates that the normal return rate is 15%. By October 11, 2017, retailers returned CDs to Pearl and were granted credit of $80,000.
Prepare Pearl's journal entries to record (a) the sale on July 10, 2017, and (b) $80,000 of returns on October 11, 2017, and on October 31, 2017. Assume that Pearl prepares financial statement on October 31, 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)