Sales Returns During 2020, Buff Corp. sold merchandise and recorded sales of $11,500,000 (all of Buff's sales are on credit, i.e., no cash is collected at the time of sale). This merchandise cost Buff Corp. $7,475,000 (65% of selling prices). Also during the year, Buff Corp. experienced returns of $450,000 in sales. The company estimates that 4% of all sales will be returned.

Requirement 1: Record the journal entry associated with the merchandise returns that occurred during 2020.

Requirement 2: Record the year-end adjusting journal entry for estimated returns.