Question
Party Warehouse Inc. rents a wide variety of products (e.g., tables, chairs, tents, and storage containers) for special events. Upon rental, Party Warehouse requires a
Party Warehouse Inc. rents a wide variety of products (e.g., tables, chairs, tents, and storage containers) for special events. Upon rental, Party Warehouse requires a deposit which is forfeited if the equipment is not returned at the end of the rental period. Deposits charged are twice the cost of the equipment, and Party Warehouse keeps the equipment in its accounting records until deposits are forfeited. On April 5, a customer rented various containers for an event to be held on April 8, and Party Warehouse collected a $10,000 deposit. The containers were returned on April 10.
Required:
1. | Prepare the entries to record the receipt of the deposit and refund of the deposit at the end of the rental period. |
2. | Assume that the customer only returns 90% of the containers on April 10. Prepare the entries to record the forfeiture of the deposit. |
CHART OF ACCOUNTS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Party Warehouse Inc. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
General Ledger | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
Prepare the entries to record the receipt of the deposit and refund of the deposit at the end of the rental period.
PAGE 9
GENERAL JOURNAL
DATE | ACCOUNT TITLE | POST. REF. | DEBIT | CREDIT | |
---|---|---|---|---|---|
1 |
| ||||
2 |
| ||||
3 |
| ||||
4 |
|
Assume that the customer only returns 90% of the equipment on April 10. Prepare the entries to record:
1. | the forfeiture of 10% of the original deposit. Assume that the refund of 90% of the original deposit has already been recorded. |
2. | the cost of the containers that were not returned. |
Additional Information
PAGE 9
GENERAL JOURNAL
DATE | ACCOUNT TITLE | POST. REF. | DEBIT | CREDIT | |
---|---|---|---|---|---|
1 |
| ||||
2 |
| ||||
3 |
| ||||
4 |
|
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started