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 $878,000.
Deposits are forfeited if containers are not returned within 18
months. Containers held by customers at January 1, 2021,
represented deposits of $548,000. In 2021, $813,000 was refunded
and deposits forfeited were $59,000.
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.
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