On May 10, 2017, Rizzo Company sold to Bryant Construction 300 tool sets at a price of $60 each (cost $40 per set) with terms of n/30, f.o.b. shipping point. Steele allows Barr to return any unused tool sets within 30 days of purchase. Steele estimates that (1) 10 sets will be returned, (2) the cost of recovering the products will be immaterial, and (3) the returned tools sets can be resold at a profit. On May 25, 2017, Barr returned six tool sets and received a credit to its account.

a) Prepare journal entries for Steele to record (1) the sale on May 10, 2017, (2) the return on May 25, 2017, and (3) any adjusting entries required on May 31, 2017 (when Steele prepares financial statements). Steele believes the original estimate of returns is correct.

b) Indicate the income statement and balance sheet reporting by Steele at May 31, 2017, of the information related to the Barr sales transaction.