D is corrent. The solutions approach is to set up a T- account for the liability for returnable containers. Deposit receipts are credited to the liability, and deposit refunds are debited to the liability. In addition, the account is debited for forfeited deposits after the 2-year refund period expires. In this case, the refund period for year 1 deliveries has expired by 12/31/Y3. Therefore, $20,000 ($50,000 – $30,000) of unclaimed year 1 deposits should be removed from the liability account and recorded as sales.A is incorrect. The solutions approach is to set up a T- account for the liability for returnable containers. Deposit receipts are credited to the liability, and deposit refunds are debited to the liability. In addition, the account is debited for forfeited deposits after the 2-year refund period expires. In this case, the refund period for year 1 deliveries has expired by 12/31/Y3. Therefore, $20,000 ($50,000 – $30,000) of unclaimed year 1 deposits should be removed from the liability account and recorded as sales. B is incorrect. The solutions approach is to set up a T- account for the liability for returnable containers. Deposit receipts are credited to the liability, and deposit refunds are debited to the liability. In addition, the account is debited for forfeited deposits after the 2-year refund period expires. In this case, the refund period for year 1 deliveries has expired by 12/31/Y3. Therefore, $20,000 ($50,000 – $30,000) of unclaimed year 1 deposits should be removed from the liability account and recorded as sales. C is incorrect. The solutions approach is to set up a T- account for the liability for returnable containers. Deposit receipts are credited to the liability, and deposit refunds are debited to the liability. In addition, the account is debited for forfeited deposits after the 2-year refund period expires. In this case, the refund period for year 1 deliveries has expired by 12/31/Y3. Therefore, $20,000 ($50,000 – $30,000) of unclaimed year 1 deposits should be removed from the liability account and recorded as sales. |
