Aamodt Music sold CDs to retailers and recorded sales revenue of $700,000. During 2010, retailers returned CDs

Question:

Aamodt Music sold CDs to retailers and recorded sales revenue of $700,000. During 2010, retailers returned CDs to Aamodt and were granted credit of $78,000. Past experience indicates that the normal return rate is 15%. Prepare Aamodt’s entries to record

(a) The $78,000 of returns

(b) Estimated returns at December 31, 2010.