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26 September, 08:43

Slotnick Chemical received $400,000 from customers as deposits on returnable containers during 2021. Twelve percent of the containers were not returned. The deposits are based on the container cost marked up 30%. How much profit did Slotnick realize on the forfeited deposits?

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  1. 26 September, 11:57
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    Profit on the forfeited deposit = $14,400

    Explanation:

    $400,000 is the amount as deposit on returnable containers

    12% were not returned

    Therefore part of the deposit that was forfeited = 400,000 * 0.12 = $48,000

    On the forfeited deposit cost marked up (gained) is 30%

    Therefore

    Profit on the forfeited deposit = 48,000 * 0.30 = $14,400
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