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Account Classifications

Prepare answers to the following attached practice problems.

Financial Accounting: Tools for Business Decision Making: Chapter 2, Exercise 2-1 (page 80);
1. E2-1 The following are the major balance sheet classifications.
Current assets (CA) Current liabilities (CL)
Long-term investments (LTI) Long-term liabilities (LTL)
Property, plant, and equipment (PPE) Common stock (CS)
Intangible assets (IA) Retained earnings (RE)
Instructions

Classify each of the following accounts taken from Hawthorne Corporation's balance
sheet.

Accounts payable and Income taxes payable
accrued liabilities Inventories
Accounts receivable Investments
Accumulated depreciation Land
Buildings Long-term debt
Cash and short-term investments Materials and supplies
Dividends payable Office equipment and furniture
Goodwill Prepaid expenses

Classify accounts on balance
sheet.

Fundamentals of Financial Accounting: Chapter 2,
Mini-Exercise 2-5,
2. M2-5 Classifying Accounts on a Balance Sheet
The following are a few of the accounts of Gomez-Sanchez Company:

1. Accounts Payable 9. Leasehold Improvements
2. Accounts Receivable 10. Notes Payable (due in three years)
3. Buildings 11. Notes Receivable (due in six months)
4. Cash 12. Prepaid Rent
5. Contributed Capital 13. Retained Earnings
6. Land 14. Supplies
7. Merchandise Inventory 15. Utilities Payable
8. Income Taxes Payable 16. Wages Payable
In the space provided, classify each as it would be reported on a balance sheet. Use the following
code:
CA _ current asset CL _ current liability SE _ stockholders' equity
NCA _ noncurrent asset NCL _ noncurrent liability

Mini-Exercise 2-7 (pages 72-73).
3. M2-7 Identifying Accounts on a Classified Balance Sheet and Their Normal Debit or
Credit Balances
Blockbuster, Inc., is the world's leading provider of rentable DVDs, videogames, and videocassettes.
Blockbuster estimates that 64 percent of the U.S. population lives within a 10-minute
drive of a Blockbuster store. The following are several of the accounts included in a recent balance
sheet:

1. Accounts Receivable 8. Retained Earnings
2. Movie Rental Supplies 9. Accounts Payable
3. Contributed Capita l 10. Cash
4. Long-Term Debt 11. Accrued Liabilities Payable
5. Prepaid Rent 12. Long-Term Liabilities
6. Intangibles 13. Merchandise Inventories
7. Property and Equipment 14. Income Taxes Payable

Required:
Indicate how each account normally should be categorized on a classified balance sheet. Use CA
for current asset, NCA for noncurrent asset, CL for current liability, NCL for noncurrent liability,
and SE for stockholders' equity. Also indicate whether the account normally has a debit or credit
balance.

Post an Excel file

Attachments

Solution Preview

Please see the attached file

1. E2-1 The following are the major balance sheet classifications.
Current assets (CA) Current liabilities (CL)
Long-term investments (LTI) Long-term liabilities (LTL)
Property, plant, and equipment (PPE) Common stock (CS)
Intangible assets (IA) Retained earnings (RE)

CA is an asset that is cash and or will be converted to cash in one year or less
NCA/PPE are assets that are used for longer periods of time
CL is a liability that would be paid in one year or less
NCL/LTL is a liability that would be paid after one year

Instructions

Classify each of the following accounts taken from Hawthorne Corporation's balance
sheet.

Accounts payable and Income taxes payable
accrued liabilities CL Inventories
Accounts receivable CA Investments
Accumulated depreciation PPE Land
Buildings PPE Long-term debt
Cash and short-term investments CA Materials ...

Solution Summary

The solution explains how to classify the accounts in the income statement and the balance sheet

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