Accounting: What the Numbers Mean 11th Edition by Wayne McManus,Daniel Viele,David Marshall

Exercise 30

Unearned revenues-customer deposits NightWoundsTime Brewing Co. distributes its products in an aluminum keg. Customers are charged a deposit of $60 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 200 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 NightWoundsTime Brewing Co., including how to account for unreturned kegs.