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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Classifications on Balance Sheet The current balance sheet of J. J. Arvesen Company contains the following major sections:

  1. A. Current assets
  2. B. Long term investments
  3. C. Properly, plant, and equipment
  4. D. Intangible assets
  5. E. Other asset
  6. F. Current liabilities
  7. G. Long term liabilities
  8. 1. H Contributed capital
  9. H. Retained earnings
  10. I. Accumulated other comprehensive income

Required:

The following is a list of accounts in random order. Using the letters A through J, indicate in which section each account would most likely he classified Also indicate with a check mark (✓) any item that is a contra account. If an account cannot be clarified in any of the preceding sections, indicate with an X and explain.

Chapter 4, Problem 1P, Classifications on Balance Sheet The current balance sheet of J. J. Arvesen Company contains the

To determine

Indicate the section of the balance sheet under which each of the accounts will be classified and also indicate with a check mark (✔) any item that is a contra account.

Explanation

Balance sheet: This financial statement reports a company’s resources (assets) and claims of creditors (liabilities) and stockholders (stockholders’ equity) over those resources. The resources of the company are assets which include money contributed by stockholders and creditors. Hence, the main elements of the balance sheet are assets, liabilities, and stockholders’ equity.

Each of the accounts is classified as follows:

AccountsClassification
1. Current AssetsD
2. Income taxes payableF
3. Notes receivable (due in 5 months)A
4. Unearned rentF
5. Discount on bonds payable (long-term bonds)G✔
6. Computer Equipment in the data processing centreC
7. FurnitureC
8. Land held for future expansionB
9. Timberland (net)C
10. Treasury stockH
11. Advances to sale personnelA
12. Idle machineryE
13. Deferred taxes payableG
14. Raw materialsA
15. Investment in held-to-maturity bondsB
16. Pollution control facilitiesC
17. Cash from security deposits of customers on returnable containersE
18. Donated capital for industrial park building site from city TH
19. TrademarksD
20. Finished GoodsA
21. Cash dividends payableF
22. Bond sinking fundB
23. Short-term investmentsA
24. Retained earningsI
25. Advances to affiliated company (long-term)B
26. Cash surrender value of life insuranceB
27. Equipment under capital leaseC
28. Additional paid-in capital on preferred stockH
29...

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