Q1P - Intermediate Accounting (Kieso)

Question

Question: P5-1 (L03) (Preparation of a Classified Balance Sheet, Periodic Inventory) Presented below is a list of accounts in alphabetical order.

Accounts Receivable                                          Inventory—Ending 

Accumulated Depreciation—Buildings              Land 

Accumulated Depreciation—Equipment           Land for Future Plant Site 

Accumulated Other Comprehensive Income    Loss from Flood 

Advances to Employees                                    Noncontrolling Interest 

Advertising Expense                                         Notes Payable (due next year) 

Allowance for Doubtful Accounts    Paid-in Capital in Excess of Par— preferred stock 

Bond Sinking Fund                                            Patents 

Bonds Payable                                                  Payroll Taxes Payable 

Buildings                                                            Pension Liability 

Cash (in bank)                                                   Petty Cash 

Cash (on hand)                                                  Preferred Stock 

Cash Surrender Value of Life Insurance           Premium on Bonds Payable

 Commission Expense                                      Prepaid Rent 

Common Stock                                                 Purchase Returns and Allowances 

Copyrights                                                         Purchases 

Debt Investments (trading)                                Retained Earnings 

Dividends Payable                                           Salaries and Wages Expense (sales) 

Equipment                                                         Salaries and Wages Payable 

Freight-In Sales                                                 Discounts 

Gain on Disposal of Equipment                        Sales Revenue 

Interest Receivable                                            Treasury Stock (at cost) 

Inventory—Beginning                                         Unearned Subscriptions Revenue

Instructions Prepare a classified balance sheet in good form. (No monetary amounts are to be shown.)

Step-by-Step Solution

Answer

Answer

The company’s balance sheet reports only those accounts whose balances must be carried forward to next year.

Step 1: Definition of Off-Balance Sheet Items

The items that are not reported on the balance sheet of the company are known as off-balance sheet items. It includes items that are not directly owned by the business entity and liabilities towards which the business entity does not have a direct obligation.

Step 2: Classified Balance sheet

Particular	Amount $	Amount $
Assets
Current assets:
Cash (in bank)
Cash (on hand)
Other cash accounts (petty cash)
Accounts receivables
Less: allowance for doubtful accounts
Inventory at end
Prepaid rent
Interest receivable
Advance to employees
Cash surrender value of life insurance
Total current assets
Long term investment:
Debt investment
Property, plant and equipment
Land
Building
Less: Accumulated depreciation – building
Equipment
Less: Accumulated depreciation – equipment
Intangible assets
Patent
Copyrights
Total assets
Liabilities and shareholder’s equity
Current liabilities:
Note payable
Salaries and wages payable
Dividend payable
Payroll tax payable
Unearned subscription payable
Total current liabilities
Non-Current liabilities
Land held for future use
Pension liability
Bond sinking fund
Bond payable
Add: premium on bond payable
Total non-current liabilities
Stockholder’s equity:
Preferred stock
Common stock
Additional paid-in preferred capital
Less: Treasury stock
Retained earnings
Accumulated other comprehensive income
Non-controlling interest
Total stockholder’s equity