Financial Accounting: In an Economic Context

PROBLEMS

P2-1

Classifying balance sheet accounts

Presented below are the main section headings of the balance sheet:

a. Current assets

b. Long-term investments

c. Property, plant, and equipment

d. Intangible assets

e. Current liabilities

f. Long-term liabilities

g. Contributed capital

h. Retained earnings

REQUIRED:

Classify the following accounts under the appropriate headings, and prepare a balance sheet in proper form without account balances.

1. Dividends payable
2. Payments received in advance
3. Allowance for uncollectible accounts
4. Inventories
5. Capital stock
6. Accumulated depreciation—building
7. Bonds payable
8. Machinery and equipment
9. Accounts receivable
10. Short-term investments
11. Buildings
12. Patents
13. Property
14. Investment fund for plant expansion
15. Wages payable
16. Cash
17. Accumulated depreciation—equipment
18. Prepaid rent
19. Trademarks
20. Land held for investment
21. Current portion due of long-term debt
22. Accounts payable
23. Short-term notes payable

P2-2

Classifying income statement accounts

The main section headings of the income statement are:

a. Sales

b. Fees earned

c. Other revenues

d. Cost of goods sold

e. Operating expenses

f. Other expenses

REQUIRED:

Classify the following descriptions under the appropriate headings and prepare an income statement in proper form without account balances.

1. Office salary expense
2. Sales of services provided
3. Insurance expense
4. Sales of inventories
5. Salespeople commission expense
6. Depreciation expense
7. Office supplies expense
8. Loss on sale of equipment
9. Income from interest on savings account ...