National Refuse Requires Customers to Pay $40 for Each Toter

Multiple Choice

National Refuse requires customers to pay $40 for each toter used for trash collection and charges this amount when delivered. When toters are returned, the amount is refunded to the customer. If a customer cancels the trash collection contract, but does not return the toter, the amount is forfeited by the customer. During the current year, 30 customers cancelled their contracts and failed to return their toter, while 105 toters are returned upon cancellation. Which of the following would be included in the journal entry to reflect the forfeiture?

A) debit to Deposit Liability for $4,200
B) debit to Deposit Liability for $1,200
C) credit to Deposit Liability for $4,200
D) credit to Deposit Liability for $5,400