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Intermediate Accounting: Reporting...

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

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

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

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

Required:

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

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. CashA
2. Bonds payableG
3. MachineryC
4. DeficitI
5. Unexpired InsuranceA
6. FranchiseD
7. Fund to retire preferred stockB
8. Current portion of mortgage payableF
9. Accumulated depreciationC✔
10. CopyrightsD
11. Investment in Held-to-maturityB
12. Allowance for doubtful AccountsA
13. Notes receivables 9 due in 3 years)B
14. Property taxes payableF
15. Deferred taxes payableG
16. Additional paid-in capital on preferred stockH
17. Premium on bonds payable (due in 8 years)G
18. Work in processA
19. Common stock, $1 parH
20...

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