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Chapter 2: 13BP (page 50)

Classify the following balance sheet items as current or noncurrent:

Retained earning

Bond payable

Accounts payable

Accrued wages payable

Prepaid expenses

Accounts receivable

Plant and equipment

Capital in excess of par

Inventory

Preferred stock

Common stock

Marketable security

Short Answer

Expert verified

Current asset means the assets which can reasonably be expected to be realizable within a year or during the normal operating cycle of the business.

Step by step solution

01

Non-current assets

The non-current assets mean the assets which can not be expected to be realized in the normal operating cycle or within one year.

02

Classification of balance sheet item as current or non-current

Particulars

Classification

Retained earnings

NA

Bonds payable

Non-current

Accounts payable

Current

Accrued wages payable

Current

Prepaid expenses

Current

Accounts receivable

Current

Plant and equipment

Non-current

Capital in excess of par

NA

Inventory

Current

Preferred stock

NA

Common stock

NA

Marketable security

Current

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Most popular questions from this chapter

Inflation can have significant effects on income statements and balance sheets, and therefore on the calculation of ratios. Discuss the possible impact of inflation on the following ratios, and explain the direction of the impact based on your assumptions.

b. Inventory turnover

If we divide users of ratios into short-term lenders, long-term lenders, andstockholders,which ratios would each group be most interested in, and for

what reasons?

The Lancaster Corporation’s income statement is given below.

b. What would be the fixed-charge-coverage ratio?

Lancaster corporation

Sales

\(246,000

Cost of goods sold

122,000

Gross profit

\)124,000

Fixed charges (other than interest)

27,500

Income before interest and taxes

\(96,500

Interest

21,800

Income before taxes

\)74,700

Taxes (35%)

26,145

Income after taxes

$48,555

Easter Egg and Poultry Company has \(2,000,000 in assets and \)1,400,000 of debt. It reports net income of $200,000.

c. If the firm has an asset turnover ratio of 2.5 times, what is the profit margin

(return on sales)?

Using the income statement for Times Mirror and Glass Co., compute the following ratios:

The total assets for this company equal \(80,000. Set up the equation for the Du Pont system of ratio analysis, and compute c, d, and e.

e. Return on assets (investment).

Times mirror and glass company

Sales

\)126,000

Less: Cost of goods sold

93,000

Gross profit

\(33,000

Less: selling and administrative expenses

11,000

Lease Expenses

4,000

Operating profit*

\)18,000

Less: Interest expenses

3,000

Earning before taxes

\(15,000

Less: Taxes (30%)

4,500

Earning after taxes

\)10,500

*equal income before interest and taxes
See all solutions

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