3.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 2021, deposits collected on containers shipped were $850,000.
Deposits are forfeited if containers are not returned within 18 months. Containers held by customers at 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.
1) Journal Entries:
| Event | General Journal | Debit | Credit |
| 1 | Cash | $850,000 | |
| Liability-Refundable deposits | $850,000 | ||
| 2 | Liability-Refundable deposits | $790,000 | |
| Cash | $790,000 | ||
| 3 | Liability-Refundable deposits | $35,000 | |
| Revenue-Sale of Confainers | $35,000 | ||
| 4 | Cost of goods sold | $35,000 | |
| Inventory of Confainers | $35,000 |
2) Balance on Dec 31 $555,000
| Balance on Jan 1 | $530,000 |
| Deposits Recived | $850,000 |
| Deposits Returned | ($790,000) |
| Deposits Forfeifed | ($35,000) |
| Balance on Dec 3 | $555,000 |
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