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Typical balance sheet classifications are as follows.      Current Assets                          &nbsp

Typical balance sheet classifications are as follows.

  1.      Current Assets                                                                              g.     Long-Term Liabilities
  2.      Investments and Funds                                                              h.     Capital Stock
  3.      Property, Plant and Equipment                                                 i.      Additional Paid-In Capital
  4.      Intangible Assets                                                                         j.      Retained Earnings
  5.      Other Assets                                                                                 k.     Notes to Financial Statements
  6.      Current Liabilities                                                                        l.      Not Reported on Balance Sheet

Indicate by use of the above letters how each of the following items would be classified on a balance sheet prepared at December 31, 2014. If a contra account, or any amount that is negative or opposite the normal balance, put parentheses around the letter selected. A letter may be used more than once or not at all.

_____     1.     Accrued salaries and wages

_____     2.     Rent revenues for 3 months collected in advance

_____     3.     Land used as plant site

_____     4.     Equity securities classified as trading

_____     5.     Cash

_____     6.     Accrued interest payable due in 30 days

_____     7.     Premium on preferred stock issued

_____     8.     Premium on bonda payable

_____     9.     Petty cash fund

_____ 10.     Unamortized discount on bonds payable due 2017

_____ 11.     Common stock at par value

_____ 12.     Bond indenture covenants

_____ 13.     Unamortized premium on bonds payable due in 2018

_____ 14.     Allowance for doubtful accounts

_____ 15.     Accumulated depreciation—equipment

_____ 16.     Reserve for plant expansion

_____ 17.     Retired equipment awaiting sale

_____ 18.     Inventory held on consignment

_____ 19.     Trading securities

_____ 20.     Investment in stock of ABC Company (held for influence)

_____ 21.     Dividends in arrears on preferred stock

Solutions

Expert Solution

1. Accrued salaries & wages : (f) Current liabilities. Because they will have to be paid within 1 accounting year or operating cycle.

2. Rent revenues for 3 months collected in advance: (f) Current liabilities. Because they will have to be paid within 1 accounting year or operating cycle.

3. Land used as plant site: (c) Property, Plant and equipment. Because it is a fixed asset for the company.

4.Equity securities classified as trading: (b) Investments and funds. Because these are investments of the company and held for trading.

5. Cash: (a) Current assets. Because cash will be used / required within the operating cycle or 1 accounting period.

6. Accrued interest payable due in 30 days: (f) Current liabilities. Because they will have to be paid within 1 accounting year or operating cycle.

7. Premium on preferred stock issued: (i) Additional paid in capital: Premium on stock issued comes under additional paid in capital because it is the amount received in excess of par value.

8. Premium on bonds payable: (g) Long term liabilities: Premium on bonds payable is a long term liability which needs to be paid to the bondholders.

9. Petty cash fund: (a) Current assets. Because cash will be used / required within the operating cycle or 1 accounting period.

10. Unamortized discount on bonds payable due 2017: (g) Long term liabilities: Unamortized discount on bonds payable due in 2017 It is the difference between the par value and proceeds and will be reported as long term liabilities (with Bonds).

11. Common stock at par value: (h) Capital stock.

12. Bond indenture covenants:

(l) Not reported in the balance sheet, because it is a legal document specifying all the important features of a bond. It is not a monetary transaction to be recorded in the financial statements.

13. Unamortized premium on bonds payable due 2018: (g) Long term liabilities: Unamortized premium on bonds payable due in 2018 It is the difference between the par value and proceeds and will be reported as long term liabilities (with the bonds).

14. Allowance for doubtful accounts: "(a)" It is contra account and is shown as deduction from the Accounts receivable in the current assets section of the balance sheet.

15. Accumulated depreciation- Equipment: "(c)" It is contra account and is shown as deduction from the equipment in the Property plant and equipment section of the balance sheet.

16. Reserve for plant expansion: (b) Investments and funds. It will be a restricted fund, to be used only for plant expansion.

17 Retired equipment awaiting sale: (k) Notes to financial statements.

18. Inventory held on consignment: (k) Notes to the financial statements.

19. Trading securities:(b) Investments and funds. Because these are investments of the company and held for trading.

20. Investment in stock of ABC: (b) Investments and funds. Because these are investments of the company.

21. Dividends in arrears of preferred stock: (k) Notes to the financial statements.

ekkarill92 answered 4 months ago
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