National Refuse Requires Customers to Pay $40 for Each Toter

question 28

Multiple Choice

National Refuse requires customers to pay $40 for each toter used for trash collection and charges this amount when delivered. When toters are returned, the amount is refunded to the customer. If a customer cancels the trash collection contract, but does not return the toter, the amount is forfeited by the customer. During the current year, 30 customers cancelled their contracts and failed to return their toter, while 105 toters are returned upon cancellation. Which of the following would be included in the journal entry to reflect the forfeiture?

• A) debit to Deposit Liability for $4,200
• B) debit to Deposit Liability for $1,200
• C) credit to Deposit Liability for $4,200
• D) credit to Deposit Liability for $5,400

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Definitions:

Outermost Part

The most external or superficial layer of an object or body.

Sound Waves

Sounds that move through the air or a different substance and become audible upon arriving at the ear of a human or an animal.

Vibration

A mechanical phenomenon whereby oscillations occur about an equilibrium point, commonly observed in objects that produce sound.

Molecules

Groups of atoms bonded together, representing the smallest fundamental units of a chemical compound that can take part in a chemical reaction.