Question

1. Smith Corporation is reviewing the following transactions for its year-ended December 31, 2015. Determine the proper balance sheet presentation and amounts for each item:

   Indicate the:

   1. Name of the account to use.
   2. Whether it is current or long-term, asset or liability.
   3. The amount.

   Show computations where necessary. If you could copy and paste each line item, and then give your answer, that would be superior.

   1. On December 15, 2015 the company declared a $2.50 per share dividend on 400,000 shares of common stock outstanding, to be paid on January 5, 2016.
   2. The amounts receivable account includes $50,000 due in three years from employees.
   3. At December 31, bonds payable of $200,000,000 are outstanding. The bonds pay 12% interest every September 30 and mature in installments of $50,000,000 every September 30.
   4. Included in long-term investments are 10-year U.S. Treasury bonds costing $500,000 that mature March 31, 2016. The bonds were purchased November 20, 2015.

Answer 1

SOLUTION:

1.DIVIDEND DECLARED:

NAME OF THE ACC: DIVIDEND PAYABLE

CLASSIFICATION: CURRENT LIABILITY AS LIABLE TO MATURE WITHIN 12 MONTHS.

AMOUNT: 2.5*400000=$100000

2.RECIEVEABLES

NAME OF ACCOUNT: DEBTORS OR RECEIVEABLES

CLASSIFICATION: LONG TERM ASSET, AS the amount would be due after 3 years which is more than 1 year.

amount: $50000

3. BONDS PAYABLE

ACCOUNT: BONDS PAYABLE AND INTEREST PAYABLE

CLASSIFICATION:

BONDS PAYABLE= LONG TERM

INTERST PAYABLE=CURRENT

AMOUNT=

BONDS PAYABLE THE AMOUNT WHICH WILL GET REMAIN AFTER PAYMENT OF INSTALLATION LIKE IN BEGGINING IT WOULD BE $200000000.

INTEREST PAYABLE THE AMOUNT WHICH GET LIABLE TO PAY WOULD BE REFLECT.

:Included in long-term investments are 10-year U.S. Treasury bonds costing $500,000 that mature March 31, 2016. The bonds were purchased November 20, 2015.

ACCOUNT NAME: U.S. BONDS.

CLASSIFICATION:CURRENT ASSET as it would be mature within 1 year.

AMOUNT; $500000.