Webster Hall, Inc. is a major publisher of college textbooks. Webster Hall allows college bookstores to return all purchases within two months of delivery. The company shipped $ 700,000 in textbooks in December 2016 based on orders for the spring 2017 semester. Webster Hall estimates that 35% of the books will be returned. All shipments were on account, and unpaid at the time of returns.
Required
a. Prepare the journal entry to record sales and estimated returns for 2016. Ignore cost of goods sold and inventory.
b. Assume that Webster Hall reports $ 189,000 in total sales returns in February 2017. Prepare the journal entry required to record the total sales returns.