Diagnostics Corp. sells its products in expensive, reusable containers. The customer is charged a deposit for each container that is delivered and receives a refund for each container that is returned within two years after the year of delivery. When a container is not returned within the time limit, Diagnostics accounts for the container as being sold at the deposit amount. Information for 2014 is as follows:

Instructions
(a) Prepare all journal entries required for Diagnostics Corp. for the reusable containers during 2014.
(b) Calculate the total amount that Diagnostics should report as a liability for reusable containers at December 31, 2014.
(c) Should the liability calculated in part (b) be reported as current or long-term? Explain.

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Containers held by customers at December 31, 2013, from deliveries in 2012 $170,000 2013 480,000 $650,000 894,000 Containers delivered in 2014 Containers returned in 2014 from deliveries in: $115,000 2012 2013 2014 280,000 310,400 705,400