Question

Diversified Semiconductors sells perishable electronic components. Some must be shipped and stored in reusable protective containers. Customers pay a deposit for each container received. The deposit is equal to the container's cost. They receive a refund when the container is returned. During 2018, deposits collected on containers shipped were $881,000. Deposits are forfeited if containers are not returned within 18 months. Containers held by customers at January 1, 2018, represented deposits of $590,000. In 2018, $822,000 was refunded and deposits forfeited were $42,500. Required: 1. Prepare the appropriate journal entries for the deposits received and returned during 2018 2. Determine the liability for refundable deposits to be reported on the December 31, 2018, balance sheet. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare the appropriate journal entries for the deposits received and returned during 2018. (If no entry is required for a transaction/event, select "No journal entry required" in the first account held.) View transaction list 1 Record the deposits collected. 2 Record the containers returned. 3 Record the deposits forfeited - record revenue.

Answer 1

Required 1:- prepare journal entries

SR.no.	Account title and explanation	Debit (in$)	Credit (in$)
1.	Cash	881000
	To liability refundable deposit		881000
	(To record the deposit collected)
2.	Liability refundable deposit	822000
	To cash		822000
	(To record the container returned)
3.	Liability refundable deposit	42500
	To revenue--sales of container		42500
	(To record the deposit forfeited -- record revenue)
4.	Cost of goods sold	42500
	To inventory of customers		42500
	(To record the deposit forfeited- adjust inventory)

Required 2:-

Balance on December 31= $606500

	Amount in $
Balance on Jan.1	590000
Deposit received	881000
Deposit returned	(822000)
Deposit forfeited	(42500)
Balance on December 31	$606500