Real World Case 13–2

Returnable containers

The Zoo Doo Compost Company processes a premium organic fertilizer made with the help of the animals at the Memphis Zoo. Zoo Doo is sold in a specially designed plastic pail that may be kept and used for household chores or returned to the seller. The fertilizer is sold for $12.50 per two-gallon pail (including the $1.76 cost of the pail). For each pail returned, Zoo Doo donates $1 to the Memphis Zoo and the pail is used again. 36


The founder and president of this start-up firm has asked your opinion on how to account for the donations to be made when fertilizer pails are returned. (Ignore any tax implications.)