Adjusting entries

Hahn Flooring Company uses a perpetual inventory system. Journalize the December 31 adjusting entries based upon the following:

a. Sales returns of $125,000 and merchandise returns of $80,000 are estimated for the current year's sales.

B. The inventory account has a balance of $1,333,150, while physical inventory indicates that $1,309,900 of merchandise is on hand. Assume any shrinkage is a normal amount.