Q1. (Classification of Balance Sheet Accounts) Presented below are the options of Faulk Company's balance sheet.
(a) Current Assets (b) Investments (c) Property, plant and equipment
(d) Intangible assets (e) Other Assets (f) Current Liabilities
(g) Noncurrent Liabilities (h) Capital Stock (i) Additional paid-in capital
(j) Retained Earnings
Instructions: Indicate by letter where each of the following items would be classified
1. Preferred Stock 2. Goodwill 3. Salaries and wages payable
4. Accounts payable 5. Buildings 6. Equity investments (trading)
7. Current maturity of long-term debt 8. Premium on bonds payable
9. Allowance for doubtful accounts 10. Accounts receivable
11. Cash surrendered value of life insurance 12. Notes payable (due next year)
13. Supplies 14. Common Stock 15. Land
16. Bond Sinking Fund 17. Inventory 18. Prepaid Insurance
19. Bonds Payable 20. Income Taxes Payable
Q2. (Preparation of classified Balance Sheet) Assume that Denis Savard Inc. has the following accounts at the end of the current year.
1. Common Stock 2. Discount on Bonds Payable 3. Treasury Stock (at cost)
4. Notes Payable (Short Term) 5. Raw Materials
6. Preferred Stock Investment (long-term) 7. Unearned Rent Revenue
8. Work in Progress 9. Copyrights 10. Buildings
11. Notes Receivable (short-term) 12. Cash 13. Salaries and Wages Payable
14. Accumulated Depreciation-Buildings 15. Restricted Cash for Plant Expansion
16. Land Held for Future Plant Site 17. Allowance for Doubtful Accounts
18. Retained Earnings 19. Paid-In-Capital in Excess Par-Common Stock
20. Unearned Subscriptions Revenue 21. Receivables-Officers (due in one year)
22. Inventory (finished goods) 23. Accounts Receivable
24. Bonds Payable (due in 4 years) 25. Noncontrolling Investment
Instructions: Prepare a classified balance sheet in good form. (No Monetary Amounts are Necessary)
Q3. (Preparation of a Balance Sheet) Presented below is the trail balance of Scott Butler Corporation December 31, 2014.
Debit Credit
Cash $197,000
Sales Revenue $8,100,000
Debt Investments (trading) (at cost, $145,000) 153,000
Cost of Goods Sold 4,800,000
Debt Investments (long Term) 299,000
Equity Investments (long-term) 277,000
Notes Payable (short-term) 90,000
Accounts Payable 455,000
Selling Expenses 2,000,000
Investment Revenue 63,000
Land 260,000
Buildings 1,040,000
Dividends Payable 136,000
Accrued Liabilities 96,000
Accounts Receivable 435,000
Accumulated Depreciation-Buildings 152,000
Allowance for Doubtful Accounts 25,000
Administrative Expenses 900,000
Interest Expense 211,000
Inventory 597,000
Gain (extraordinary) 80,000
Notes Payable (long term) 900,000
Equipment 600,000
Bonds Payable 1,000,000
Accumulated Depreciation-Equipment 60,000
Franchises 160,000
Common Stock ($5 par) 1,000,000
Treasury Stock 191,000
Patents 195,000
Retained Earnings 78,000
Paid-in-Capital in Excess Par 80,000
Totals _______________________
$12,315,000 $12,315,000
Instructions: Prepare a balance sheet at December 31, 2014, for Scott Butler Corporation (Ignore income taxes)
Q4. (Statement of Cash Flows-Classification) The major classifications of activities reported in the statement of cash flows are operating, investing, and financing. Classify each of the transactions listed below as:
1. Operating activity- add to net income
2. Operating activity- deduct from net income
3. Investing activity
4. Financing activity
5. Reported as significant noncash activity
The transactions are as follows:
(a) Issuance of common stock (b) Purchase of land and building
(c) Redemption of bonds (d) Sale of equipment
(e) Depreciation of machinery (f) Amortization of patent
(g) Issuance of bonds for plant assets (h) Payment of cash dividends
(i) Exchange of furniture for office equipment (j) Purchase of treasury stock
(k) Loss on sale of equipment (l) Increase in accounts receivable during the year
(m) Decrease in accounts payable during the year
Q5. (Balance Sheet Preparation) Presented below are a number of balance sheet items for Montoya, Inc. for the current year 2014
Goodwill $125,000 Accumulated depreciation-equipment $292,000
Payroll taxes payable 177,591 Inventory 239,800
Bonds Payable 300,000 Rent Payable (short-term) 45,000
Discount Bonds Payable 15,000 Income taxes payable 98,362
Cash 360,000 Rent Payable (long-term) 480,000
Land 480,000 Common Stock $1 par value 200,000
Notes Receivable 445,700 Preferred Stock $10 par value 150,000
Notes Payable (to banks) 265,000 Prepaid Expenses 87,920
Accounts Payable 490,000 Equipment 1,470,000
Retained Earnings ? Equity Investments (trading) 121,000
Income taxes Receivable 97,630 Accumulated depreciation-buildings 270,200
Notes payable (long-term) 1,600,000 Buildings 1,640,000
Instructions: Prepare a classified balance sheet in good form. Common stock authorized was 400,000 shares, and preferred stock authorized was 20,000 shares. Assume that notes receivable and notes payable are short-term, unless stated otherwise. Cost and fair value of equity investments (trading) are the same.