New Revenue Recognition Standard-Adjusting Journal Entries-Sales Returns and Allowances During the year, Reed Company sells merchandise on account totaling $2,000,000 (the cost to Reed for this merchandise was $800,000). Reed allows a 60-day return privilege for the merchandise it sells. At year-end, Reed estimates there remain $350,000 of sales (with a cost to Reed of $140,000) that are still within the 60-day return period. Based on past experience, Reed expects 5 percent of this merchandise to be returned. Prepare the period-end adjusting journal entries needed for Reed Company to comply with the new revenue recognition standard. Reed's fiscal year-end is December 31. General Journal Description Debit Credit 0 0 0 To record estimated return of sales stll eligible for return. C To record the cost of merchandise sold for sales still eligible for return