Clark's Chemical Company received customer deposits on returnable containers in the amount of $100,000 during 2013. Twelve percent of the containers were not returned. The deposits are based on the container cost marked up 20%. What is cost of goods sold relative to this forfeiture?

Question

Quizplus · Accepted Answer

The forfeited deposits amount to 12% of $100,000, which is $12,000. Since the deposits include a 20% markup, the cost of goods sold is $12,000 / 1.2 = $10,000.

Clark's Chemical Company Received Customer Deposits on Returnable Containers in the Amount