Diversified Semiconductors sells perishable electronic components. Some must be shipped and stored in reusable protective containers. Customers pay a deposit for each container received. The deposit is equal to the containers cost. They receive a refund when the container is returned. During 2024, deposits collected on containers shipped were $881,000.

Deposits are forfeited if containers are not returned within 18 months. Containers held by customers at January 1, 2024, represented deposits of $590,000. In 2024, $822,000 was refunded and deposits forfeited were $42,500.

Required:

Prepare the appropriate journal entries for the deposits received, returned, and forfeited during 2024.

Determine the liability for refundable deposits to be reported on the December 31, 2024, balance sheet.