Olympia Hardware, Inc., had sales totaling $14,300 during the month of September. Based on experience, company management expects 7 percent of the sales amount will be refunded to customers in the form of sales returns and allowances. The cost to Olympia Hardware, Inc., of the goods that are estimated to be returned is $565. The following sale-related transactions for Olympia Hardware, Inc., occurred during the month of October.

Oct 3 Sold $3,300 (cost $2,100) of merchandise on account to C. Williams. Terms, 1/15, n/45, FOB destination.
4 Paid $75 to ship the goods sold on October 3 to C. Williams.
10 Sold $2,700 (cost $1,650) of merchandise to cash customers.
17 Received payment in full from C. Williams for the October 3 sale.
22 Sold $4,700 (cost $2,800) of merchandise on account to S. Gomez. Terms, 2/10, n/30, FOB shipping point.
26 Granted S. Gomez a $300 allowance on the October 22 sale due to minor defects in the goods shipped.
30 Received payment in full from S. Gomez for the October 22 sale.

Requirements

1. Journalize the necessary journal entries for Olympia Hardware, Inc., to record the estimated refunds on September 30. No explanations are necessary.

2. Journalize the October transactions for Olympia Hardware, Inc., assuming the “net” method is used. No explanations are necessary.