L.L. Bean offers a 100% satisfaction guarantee. Assume that L.L. Bean has a long history with a consistent 10% return rate.

1. Journal entry 1: Make the adjusting entry for January to reflect the estimated refunds for the January boot sales of $140,000.
2. Journal entry 2: Also make the adjusting entry to record the cost of estimated returns for January boot sales. Use a cost of goods sold percentage of 40% of sales.