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Customer deposits

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You are in charge of a storage shed business. You recognize sales when the shed is fully installed in the customer's yard. Your company takes 25% deposits on all orders. At the end of your accounting cycle, you have $500,000 in customer deposits.

How do you state and properly account for this activity in your financial statements?

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Solution Summary

The solution explains the accounting treatment for customer deposits.

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Deposits are a form of advance taken from the customers to execute the orders. The deposit would be adjusted against the sales when the order is executed.
The advance taken before the sales are recorded are ...

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