Wu, Inc. sells merchandise of $1,000,000 on account with a cost of $650,000 during 2023. Wu allows $16,000 of returns of merchandise from customers in 2023, the first year of operations. On December 31, 2023, Wu estimates total returns will ultimately be 2% of total credit sales. Assume that customers pay for the merchandise prior to returning it. Required:

1.Record the sale of merchandise during 2023.

2. Record the actual returns in 2023 assuming the company uses a perpetual inventory system.

3. Record estimated returns at the end of the year.