The various classifications listed below have been used in the past by Pyle Company on its balance sheet. It asks your professional opinion concerning the appropriate classification of each of the items 1-14 below.
a. Current Assets f. Current Liabilities
b. Investments g. Long-Term Liabilities
c. Plant and Equipment h. Common Stock and Paid-in Capital in Excess of Par
d. Intangible Assets i. Retained Earnings
e. Other Assets
Indicate by letter how each of the following items should be classified. If an item need not be reported on the balance sheet, use the letter "X." A letter may be used more than once or not at all. If an item can be classified in more than one category, choose the category most favored by the authors of your textbook.
1. Employees' payroll deductions.
2. Cash in sinking fund.
3. Rent revenue collected in advance.
4. Equipment retired from use and held for sale.
6. Payroll cash fund.
7. Goods held on consignment.
8. Accrued revenue on temporary investments.
9. Advances to salespersons.
10. Premium on bonds payable due two years from date.
11. Bank overdraft.
12. Salaries which company budget shows will be paid to employees within the next year.
13. Work in process.
14. Appropriation for bonded indebtedness.
1. Employees' payroll deductions is a current liability because it is due to IRS and State.
2. Cash in sinking fund is a non current asset (other asset) to be used to retire debt later.
3. Rent revenue collected in advance is a current liability because it must be refunded if not earned.
4. Equipment retired from use and held for sale is either an investment or an other asset. Other asset would seem the better of the ...
Balance Sheet Classification for Pyle Company: for the list of 14 accounts, the solution presents a sentence to explain the classification of each account.