The Zoo Doo Company processes a premium organic fertilizer made with the help of

Question

The Zoo Doo Company processes a premium organic fertilizer made with the help of the animals at the St.Louis 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 St.Louis Zoo and the pail is used again. Required: The founder and president of this start-up firm has asked your opinion on how to account for the donations to made when Fertilizer pails are returned. (Ignore any tax implications).

Explanation / Answer

Account of donation can be done easily. When we donate 1$ then 1$ should be reduced from cash account and it should be added as an expense. Debit 1$ to expense account Credit 1$ to cash account

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