Unformatted text preview: allotted time. Deposits charged are twice the actual cost of containers. The inventory of containers remains on the companys books until deposits are forfeited. When Deposits Are Collected Cash 300,000 Liability- refundable deposits 300,000 When Containers Are Returned * Liability refundable deposits 270,000 Cash 270,000 When Deposits Are Forfeited * Liability- refundable deposits 30,000 Revenue sale of containers 30,000 Cost of goods sold 15,000 Inventory containers 15,000 *Of course, not all the containers are returned at the same time, nor does the allotted time period to be able to make a return expire at the same time for all containers not returned. This is a simplistic assumption for the purposes of this example. Source: Intermediate Accounting , Spiceland, Sepe, Tomassini, 4 th Edition, McGraw Hill, pgs. 620-621....
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- Spring '10
- $300,000, one year, deposits, ninety percent, Rancor Chemical Company