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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
ASSETS 111 Cash 121 Accounts Receivable 141 Inventory of Equipment 152 Prepaid Insurance 181 Equipment 189 Accumulated Depreciation LIABILITIES 211 Accounts Payable 231 Salaries Payable 233 Deposit from Customer 250 Unearned Revenue 261 Income Taxes Payable EQUITY 311 Common Stock 331 Retained Earnings	REVENUE 432 Revenue from Deposits EXPENSES 511 Insurance Expense 512 Utilities Expense 521 Salaries Expense 532 Bad Debt Expense 540 Interest Expense 541 Depreciation Expense 559 Miscellaneous Expenses 910 Income Tax Expense

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

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