Balance sheet multiple choice



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Required:



Indicate by letter how each of the following should be best classified. If an item would not appear on the balance sheet but would appear in a note to the financial statements, use the letter "N" to indicate this. If an item is neither reported on the balance sheet nor disclosed as a note, use the letter "X" to indicate this. If the account balance is normally opposite that of a typical account in that classification, indicate this by placing the letter in parentheses.


a.

Patents

b.

Merchandise Inventory

c.

Taxes Payable

d.

Employee Payroll Deduction for State Income Taxes

e.

Cash

f.

Office Supplies

g.

Preferred Stock

h.

Common Stock

i.

Work in Process

j.

Land

k.

Accounts Receivable

l.

Accumulated Depreciation

m.

Unearned Rent Income

n.

Unamortized Bond Payable Discount (bond payable five years from current balance sheet date)

o.

Receivable from Officer—due in 6 months

p.

Accumulated Deficit (losses incurred since inception)

q.

Insurance Expense

r.

Goodwill

s.

Interest Accrued on U.S. Government Securities Owned

t.

Accounts payable

u.

Treasury Stock

v.

Wages Payable

w.

Land Purchased as Future Development Site

x.

Unexpired Rent Expense (prepaid rent)

ANS:



a.

D

b.

A

c.

E

d.

E

e.

A

f.

A

g.

G

h.

G

i.

A

j.

C

k.

A

l.

(C)

m.

E

n.

(F)

o.

A

p.

(H)

q.

X

r.

D

s.

A

t.

E

u.

(I)

v.

E

w.

B

x.

A

2. Required:

Using the letters provided, classify items (1–13) according to the most commonly preferred balance sheet presentation.




    Assets

    Liabilities and Stockholders' Equity

a. Current Assets

f. Current Liability

b. Tangible Assets

g. Long-Term Liability

c. Investments

h. Capital Stock

d. Intangibles

i. Retained Earnings

e. Other

j. Items Not Included on Balance Sheet



1.

Land

2.

Marketable Securities

3.

Goodwill

4.

Inventories

5.

Premium on Preferred Stock

6.

Appropriation for Expansion

7.

Depreciation Expense

8.

Investment in K Company Bonds (long-term investment)

9.

Accounts Payable

10.

Bonds Payable

11.

Equipment

12.

Copyright

13.

Unamortized Premium on Bonds Payable

ANS:



1.

b

2.

a

3.

d

4.

a

5.

h

6.

i

7.

j

8.

c

9.

f

10.

g

11.

b

12.

d

13.

g

3. A partial list of accounts for Johnson and Clark, in alphabetical order, is presented below:


Accounts Payable

Accounts Receivable

Accrued Salaries Payable

Accumulated Depreciation—Buildings

Accumulated Depreciation—Equipment

Additional Paid-In Capital—Common Stock

Allowance for Doubtful Accounts

Bank Loan (long-term)

Bonds Payable

Buildings

Cash in Bank

Commission Expense

Common Stock

Current Portion of Long-Term Debt

Equipment

FICA Taxes Payable

Franchise

Goodwill


Interest Income

Interest Receivable

Inventory—Ending Balance

Land


Land Held for Future Plant Site

Loss on Sale of Equipment

Marketable Securities

Minority Interest

Notes Payable (long-term)

Obligations on Long-Term Loans

Patent

Preferred Stock



Premium on Bonds Payable

Prepaid Expenses

Purchases

Retained Earnings

Sales

Sales Salaries Expense



Treasury Stock

Unearned Rent Revenue


Required:

Prepare a balance sheet in good format, without monetary amounts, for December 31, 2010. Use the format Current Assets; Property, Plant, and Equipment; Investments; Intangibles; Current Liabilities; Long-Term Liabilities; and Stockholders' Equity. Do not use the accounts not found on the balance sheet.

ANS:


Johnson and Clark

Balance Sheet



December 31, 2010

Assets




Current Assets:




   Cash in Bank




   Marketable Securities




   Accounts Receivable




   Less: Allowance for Doubtful Accounts




   Interest Receivable




   Inventory (ending balance)




   Prepaid Expenses




Total Current Assets




Property, Plant, and Equipment:




   Land




   Buildings




   Less: Accumulated Depreciation—Buildings




   Equipment




   Less: Accumulated Depreciation—Equipment










Investments:




   Land Held for Future Plant Site










Intangibles:




   Franchise




   Patent




   Goodwill




   Total Assets










Liabilities and Stockholders' Equity










Current Liabilities:




   Accounts Payable




   Accrued Salaries Payable




   FICA Taxes Payable




   Unearned Rent Revenue




   Current Portion of Long-Term Debt




      Total Current Liabilities










Long-Term Liabilities:




   Bonds Payable




   Plus: Premium on Bonds Payable




   Notes Payable—Long-Term




   Bank Loan—Long-Term




   Obligations on Long-Term Loans




   Minority Interest













Stockholders' Equity:




   Preferred Stock




   Common Stock




   Additional Paid-In Capital—Common Stock




   Retained Earnings




   Less: Treasury Stock




      Total Liabilities and Stockholders' Equity



4. The following is a partial listing of accounts for Euisara, Inc., for the year ended December 31, 2010.


Required:

Prepare a balance sheet in good format for December 31, 2010.




Finished Goods

$   9,718

Current Maturities of Long-Term Debt

1,257

Accumulated Depreciation

9,980

Accounts Receivable

24,190

Sales Revenue

127,260

Treasury Stock

251

Prepaid Expenses

2,199

Deferred Taxes (long-term liability)

8,506

Interest Expense

2,410

Allowance for Doubtful Accounts

915

Retained Earnings

18,951

Raw Materials

9,576

Accounts Payable

19,021

Cash and Cash Equivalents

8,527

Sales Salaries Expense

872

Cost of Goods Sold

82,471

Investment in Unconsolidated Subsidiaries

3,559

Income Taxes Payable

8,356

Work In Process

1,984

Additional Paid-In Capital

9,614

Equipment

41,905

Long-Term Debt

15,258

Rent Income

2,468

Common Stock

3,895

Notes Payable (short-term)

6,156

Income Tax Expense

2,461



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