which it bases on total sales of that period 564023

Based on historical data, Nordstrom estimates that customers will return goods amounting to 1% of its sales. The customers will receive full refunds or store credit. If total sales in an accounting period are $600 million, Nordstrom will recognize an estimated liability for sales returns of $6 (=.01x $600) million, recorded as follows:

To recognize the estimate of sales that customers will return.

The firm does not record sales returns, allowances, and discounts for individual sales of merchandise. Instead, it records adjustments to sales revenue in adjusting entries at the end of each reporting period, which it bases on total sales of that period.