Diversified Industries Sells Perishable Electronic Products

question 37

Essay

Diversified Industries sells perishable electronic products. Some must be shipped in reusable containers. Customers pay a deposit for each container. The deposit is equal to the container's cost. Customers receive a refund when the container is returned. During 2013, deposits collected on containers shipped were $700,000. Deposits are forfeited if containers are not returned in 18 months. Containers held by customers on January 1, 2013, were $330,000. During 2013, $410,000 was refunded and deposits of $25,000 were forfeited.
Required:
1. Prepare the appropriate journal entries for the deposits received and returned during 2013.
2. Determine the liability for refundable deposits to be reported in the December 31, 2013, balance sheet.

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Definitions:

Higher Standard

An elevated level of quality or expectation that something or someone is measured against.

Physical Tension

A state of bodily or muscular strain often resulting from stress or exercise, which can lead to discomfort or pain.

Stress

A psychological and physical response to demands that exceed an individual's coping abilities, affecting health and well-being.

Defense Mechanisms

Psychological strategies unconsciously used to protect oneself from anxiety by distorting reality.