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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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Wizard Company reports the following on its year-end adjusted trial balance: Long-Term Bonds Payable, $4,500; Unamortized Bond Discount, $600; Accrued Pension Cost, $9,000; Mortgage Payable, $5,000; and Fund to Retire Long Term Bonds Payable, $8,500. Prepare the long term liabilities section of Wizard’s year end balance sheet.

To determine

Prepare the long-term liabilities section of W’s year-end balance sheet.

Explanation

Classified balance sheet: The main elements of balance sheet assets, liabilities, and stockholders’ equity are categorized or classified further into sections, and sub-sections in a classified balance sheet. Assets are further classified as current assets, long-term investments, property, plant, and equipment (PPE), and intangible assets. Liabilities are classified into two sections current and long-term. Stockholders’ equity comprises of common stock and retained earnings. Thus, the classified balance sheet includes all the elements under different sections.

Long-term Liabilities: The liabilities which have a longer maturity period (more than one year) are referred as long-term liabilities.

Examples of Long-term Liabilities: Examples of long-term liabilities are as follows:

  • ■ Notes Payable
  • ■ Mortgage Payable
  • ■ Bonds Payable

Prepare the long-term liabilities section of W’s year-end balance sheet:

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