Question

3. WINI I ue approp bol Diversified Semiconductors sells perishable electronic components. Some must be shipped and stored in reak protective containers. Customers pay a deposit for each container received. The deposit is equal to the contained cost. They receive a refund when the container is returned. During 2021, deposits collected on containers shinpe were $850,000. Deposits are forfeited if containers are not returned within 18 months. Containers held by customers January 1, 2021, represented deposits of $530,000. In 2021, $790,000 was refunded and deposits forfeited were $35,000, Required: 1. Prepare the appropriate journal entries for the deposits received, returned, and forfeited during 2021. 2. Determine the liability for refundable deposits to be reported on the December 31, 2021, balance sheet.

Answer 1

Answer:

1. Journal Entries

Event	General Journal	Debit ($)	Credit ($)
1	Cash	$850,000
	Liability - Refundable deposites		$850,000
2	Liability - Refundable deposites	$790,000
	Cash		$790,000
3	Liability - Refundable deposites	$35,000
	Revenue - Sale of containers		$35,000
4	Cost of goods sold	$35,000
	Inventory of containers		$35,000

2.

Balance on Jan 1	$530,000
Deposites Received	$850,000
Deposites refunded	($790,000)
Deposites forfeited	($35000)
Balance on Dec 31	$555,000