Exercise $7\mathrm{.}13$

LO $7-3$

Unearned revenues$-$customer deposits Night WoundsTime Brewing Co$.$ distributes its products in an aluminum keg. Customers are charged

a deposit of $$80$ per keg; deposits are recorded in the Keg Deposits account.

Required:

a$.$ Where on the balance sheet will the Keg Deposits account be found? Explain your answer.

b$.$ Use the horizontal model $($or write the journal entry$)$ to show the effect of giving a keg deposit refund to a customer for one keg.

c$.$ A keg use analyst who works for NightWoundsTime estimates that $300$ kegs for which deposits were received during the year will never

be returned. What accounting, if any, would be appropriate for the deposits associated with these kegs?

d$.$ Describe the accounting that would be appropriate for the cost of the kegs that are purchased and used by Night WoundsTime Brewing

Co$.,$ including how to account for unreturned kegs.