Eames Fine Furniture sells high quality, roll-top desks. The company allows customers to return products for a full refund within 90 days of purchase. The desks sell for $3,000 and cost the company $2,000 to manufacture. The company expects that any returned desks can be resold for a profit. The company has reviewed historical financial data and determined that 0.5% of all desks sold are returned for a refund. During the month of January, the company sold 800 desks.

Required:

a. Prepare all the required journal entries to record the January sales.

b. Assume one desk was actually returned by the end of January. Prepare the journal entry required to record the return and describe the appropriate accounting treatment of any further returns.