On October 2, 2017, Carla Company sold $6,260 of its elite camping gear (with a cost of $3,900) to Lynch Outfitters on credit. As part of the sales agreement, Carla includes a provision that if Lynch is dissatisfied with the product, Carla will grant an allowance on the sales price or agree to take the product back (although returns are rare, given the long-term relationship between Carla and Lynch). Carla expects total allowances to Lynch to be $800. On October 16, 2017, Carla grants an allowance of $400 to Lynch because the color for some of the items delivered was a bit different than what appeared in the catalog.

Prepare journal entries for Carla to record (1) the sale on October 2, 2017, (2) the granting of the allowance on October 16, 2017, and, (3) any adjusting required on October 31, 2017 (when Carla prepares financial statements). Carla now estimates additional allowances of $240 will be granted to Lynch in the future. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)

no	Account TItles and Explanation	Debit	Credit
1
	(to record sales)
	(to record cost of goods sold)
2
	(to record allowance)
	(to record estimated remaining allowance)

Indicate the income statement and balance sheet reporting by Carla at October 31, 2017, of the information related to the Lynch transaction. Income Statement

Balance Sheet