During 2024, its first year of operations, Hollis Industries recorded sales of $11,600,000 and experienced returns of $710,000. Cost of goods sold totaled $7,540,000 (65% of sales). The company estimates that 7% of all sales will be returned.

Prepare the year-end adjusting journal entries to account for anticipated sales returns under the assumption that all sales are made for cash (no accounts receivable are outstanding).

Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.