On October 2, 2020, Ivanhoe Company sold $5,630 of its elite camping gear (with a cost of $3,320) to Lynch Outfitters. As part of the sales agreement, Ivanhoe includes a provision that if Lynch is...

On October 2, 2020, Ivanhoe Company sold $5,630 of its elite camping gear (with a cost of $3,320) to Lynch Outfitters. As part of the sales agreement, Ivanhoe includes a provision that if Lynch is dissatisfied with the product, Ivanhoe 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 Ivanhoe and Lynch). Ivanhoe expects total allowances to Lynch to be $760. On October 16, 2020, Ivanhoe 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.