Whispering Ranch & Farm is a distributor of ranch and farm equipment. Its products range from small tools, power equipment for trench-digging and fencing, grain dryers, and barn winches. Most products are sold direct via its company catalog and Internet site. However, given some of its specialty products, select farm implement stores carry Whispering's products. Pricing and cost information on three of Whispering's most popular products are as follows.

ItemStandalone

Selling Price (Cost)Mini-trencher$ 3,700

($1,900)Power fence hole auger1,100

(800)Grain/hay dryer15,400

(10,100)

Respond to the requirements related to the following independent revenue arrangements for Whispering Ranch & Farm.

(a)

On January 1, 2020, Whispering sells 30 augers to Mills Farm & Fleet for $33,000. Mills signs a 6-month note at an annual interest rate of 12%. Whispering allows Mills to return any auger that it cannot use within 60 days and receive a full refund. Based on prior experience, Whispering estimates that 5% of units sold to customers like Mills will be returned. Whispering's costs to recover the products will be immaterial, and the returned augers are expected to be resold at a profit. Prepare the journal entry for Whispering on January 1, 2020.