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On October 2, 2020, Indigo Company sold $ 6,220 of its elite camping gear (with a cost of $3,670) to Lynch Outfitters. As part of the sales agreement, Indigo includes a provision that if Lynch is dissatisfied with the product, Indigo will grant an allowance on the sales price or agree to take the product back (although returns are rare given the long-term relationship between Indigo and Lynch). Indigo expects total allowances to Lynch to be $ 790. On October 16, 2020, Indigo grants an allowance of $ 410 to Lynch because the color for some of the items delivered was a bit different than what appeared in the catalog. (b) Indicate the income statement and balance sheet reporting by Indigo at October 31, 2020, of the information related to the Lynch transaction. Income Statement (partial) V $ $ Balance Sheet (partial) $ Prepare journal entries for Indigo to record (1) the sale on October 2, 2020, (2) the granting of the allowance on October 16, 2020, and, (3) any adjusting required on October 31, 2020 (when Indigo prepares financial statements). Indigo now estimates additional allowances of $ 250 will be granted to Lynch in the future. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts.) No Account Titles and Explanation Debit Credit (1) Accounts Receivable 6220 Sales Revenue 6220 (To record sales on account) Cost of Goods Sold 3670 Inventory 3670 (To record cost of goods sold) (2) Sales Returns and Allowances 410 Accounts Receivable 410 (To record allowance) (3) Sales Returns and Allowances 250 Allowance for Sales Returns and Allowances 250 (To record estimated remaining allowances)