Reference no: EM132640895

Question - Grouper Ltd. operates a microbrewery and sells beer directly to customers, bars, and restaurants. Grouper uses one-litre blue glass refillable bottles featuring a swing-top ceramic lid. The bottles cost Grouper $3.9 each. Grouper charges customers a refundable deposit of $4 for each bottle at the point of sale of their beer and records amounts received to the account Returnable Deposits. The $4 deposit amount is standard for this specialized segment of the micro beer industry and is close to the cost of the bottles. In addition, since the bottle returns must be made at the brewery location, Grouper is using this relatively high deposit amount as a marketing strategy because it provides an incentive for customers to return to the brewery to have their bottles refilled. Based on past experience, Grouper estimates that 70% of the bottles do not get returned for refund. Grouper makes an adjustment at the end of the fiscal year for unreturned deposits to the account Container Sales Revenue.

Required - Using the periodic system, prepare summary journal entry for the cash sale of 5,000 bottles of beer with a selling price of $7, plus bottle deposit recorded to Refund Liability.