Answer:
1.
a. Dr Cash $948,000
Cr Liability for refundable deposits $948,000
b. Dr Liability for refundable deposits $873,000
Cr Cash $873,000
c. Dr Liability for refundable deposits $42,750
Cr Sale of containers $42,750
d. Dr Cost of goods sold $42,750
Cr Inventory of containers $42,750
2. $655,250
Explanation:
1. Preparation of Journal entries
Based on the information given we were told that the deposits collected on containers that were shipped was the amount of $948,000 which means that the Journal entry will be:
a. Dr Cash $948,000
Cr Liability for refundable deposits $948,000
b. Based on the information given we were told that the amount of $873,000 was refunded which means that the Journal entry will be :
Dr Liability for refundable deposits $873,000
Cr Cash $873,000
c. Based on the information given we were told that the deposits forfeited were the amount of $42,750 which means that the Journal entry will be :
Dr Liability for refundable deposits $42,750
Cr Sale of containers $42,750
Dr Cost of goods sold $42,750
Cr Inventory of containers $42,750
2. Calculation to Determine the liability for refundable deposits to be reported on the December 31, 2021, balance sheet.
Liability for refundable deposits, January 1, 2021 $623,000
Add: Deposits received during 2021 $948,000
Less: Deposits returned during 2021 ($873,000)
Less:Deposits forfeited during 2021 ($42,750)
Balance, December 31, 2021 $655,250
Therefore the liability for refundable deposits to be reported on the December 31, 2021, balance sheet will be $655,250
