You have been asked to review the December 31, 2021, balance sheet for Champion Cleaning. After completing your review, you list the following three items for discussion with your superior:

1. An investment of $30,000 is included in current assets. Management has indicated that it has no intention of liquidating the investment in 2022.

2. A $100,000 note payable is listed as a long-term liability, but you have determined that the note is due in 10 equal annual installments with the first installment due on March 31, 2022.

3. Deferred revenue of $60,000 is included as a current liability even though only two-thirds will be recognized as revenue in 2022, and the other one-third in 2023. Determine the appropriate classification of each of these items.

Expert Solution

1. The $30,000 should be classified as a long-term asset, under the investments classification.

2. $10,000, next year’s installment, should be classified as a current liability, current maturities of long-term debt. The remaining $90,000 is included in long-term liabilities.

3. Two-thirds of the deferred revenue, $40,000, should be classified as a current liability, the remaining $20,000 as a long-term liability.

1. The $30,000 should be classified as a long-term asset.

2. The $10,000 should be classified as a current liability.

3. The $40,000 should be classified as a current liability.

Renze Joy Candido answered 2 years ago

You have been asked to review the December 31, 2021, balance sheet for Champion Cleaning. After...

You have been asked to review the December 31, 2021, balance sheet for Champion Cleaning. After completing your review, you list the following three items for discussion with your superior: An investment of $33,000 is included in current assets. Management has indicated that it has no intention of liquidating the investment in 2022. A $130,000 note payable is listed as a long-term liability, but you have determined that the note is due in 10, equal annual installments with the first...

The December 31, 2021, year-end inventory balance of the Raymond Corporation is $250,000. You have been asked to review...

The December 31, 2021, year-end inventory balance of the Raymond Corporation is $250,000. You have been asked to review the following transactions to determine if they have been correctly recorded. Goods shipped to Raymond f.o.b. destination on December 26, 2021, were received on January 2, 2022. The invoice cost of $50,000 is included in the preliminary inventory balance. At year-end, Raymond held $34,000 of merchandise on consignment from the Harrison Company. This merchandise is included in the preliminary inventory balance....

Bradley-Link’s December 31, 2021, balance sheet included the following items:

Bradley-Link’s December 31, 2021, balance sheet included the following items: Long-Term Liabilities ($ in millions) 9.6% convertible bonds, callable at 101 beginning in 2022, due 2025 (net of unamortized discount of $2) [note 8]........................................................................$198 10.4% registered bonds callable at 104 beginning in 2031, due 2035 (net of unamortized discount of $1) [note 8]............................................................................49 Shareholders’ Equity Equity—stock warrants........4 Note 8: Bonds (in part) The 9.6% bonds were issued in 2008 at 97.5 to yield 10%. Interest is paid semiannually on June...

Following is a list of items taken from the December 31, 2017, balance sheet of Reagan...

Following is a list of items taken from the December 31, 2017, balance sheet of Reagan Company (amounts omitted): Accounts payable Goodwill Accrued expenses Income taxes payable Accumulated depreciation—buildings Land Accumulated depreciation—machinery and equipment Machinery and equipment Bonds payable Notes payable to banks (short term) Buildings Preferred stock Cash Prepaid expenses Common stock Raw materials Contributed capital in excess of par Retained earnings Current portion of long-term debt Short-term investments Deferred tax liability (noncurrent) Trade accounts receivable Finished products inventory...

XYZ Corporation is preparing its December 31, 2021, balance sheet. The following items may be reported...

XYZ Corporation is preparing its December 31, 2021, balance sheet. The following items may be reported as either a current or long-term liability.  1. On December 15, 2021, XYZ declared a cash dividend of $2.50 per share to stockholders of record on December 31. The dividend is payable on January 15, 2022. XYZ has issued 1,000,000 shares of common stock, of which 50,000 shares are held in treasury.  2. At December 31, bonds payable of $100,000,000 are outstanding....

Cone Corporation is in the process of preparing its December 31, 2021, balance sheet. There are some questions as to the proper classification of the following items:

Cone Corporation is in the process of preparing its December 31, 2021, balance sheet. There are some questions as to the proper classification of the following items: a. $50,000 in cash restricted in a savings account to pay bonds payable. The bonds mature in 2025. b. Prepaid rent of $24,000, covering the period January 1, 2022, through December 31, 2023. c. Notes payable of $200,000. The notes are payable in annual installments of $20,000 each, with the first installment payable on March...

ABC's balance sheet includes the following asset, at December 31, 2019 after annual depreciation has been...

ABC's balance sheet includes the following asset, at December 31, 2019 after annual depreciation has been recorded: Equipment......................................................... $95000 Less: accumulated depreciation....................... (25000) Net Book value ................................................. $70000 After performing its annual review for impairment, ABC obtains the following data: Equipment’s value in use.................................. $58000 Equipment’s fair value less disposal costs.......... 62000 The remaining useful life of the asset at January 1, 2020 is 5 years. ABC. applies straight-line depreciation to its equipment assets and...

You have been asked, as a member of a small Accounting firm, to review the 31...

You have been asked, as a member of a small Accounting firm, to review the 31 December year-end financial statements of a small (R2 million revenues) companyin East London. The company has applied for a long-term loan from the bank. You are interesed to note as you beign your review of the company's records that a principal stockholder is your former college roommate. You are preparing your report and wonder about the following items: - The company decided during the...

1.As of December 31, 2016, the Balance Sheet of Peterson Products, Inc. contains the following items...

1.As of December 31, 2016, the Balance Sheet of Peterson Products, Inc. contains the following items (in random order): Accounts Payable $ 10,000 Land 80,000 Building 240,000 Notes Payable 125,000 Accounts Receivable 30,000 Cash 6,000 Retained Earnings 100,000 Common Stock 180,000 Equipment ? Determine the amount for Equipment. A. $69,000 B. $145,000 C. $45,000 D. $59,000 2. Simon Corporation had a transaction that caused a $60,000 increase in both assets and liabilities. This transaction could have been: A. Paying cash...

What career plans do you have after completing your degree? Review the mission statement of the...

What career plans do you have after completing your degree? Review the mission statement of the College of Nursing and Health Care Professions, your program of study, and the welcome message on the college's main page of the GCU website. Discuss how the college's mission and your program of study align with your career plans. Formulate three personal and three professional goals that you believe will help you successfully complete your program and obtain the career to which you aspire.

Question