(Classification of Balance Sheet Accounts) Assume that Fielder Enterprises uses the following headings on its balance sheet.

(a) Current assets	(g) Long-term liabilities
(b) Investments	(h) Capital stock
(c) Property, plant, and equipment	(i) Equity attribute to non-controlling interest
(d) Intangible assets	(i) paid-in-capital in excess of par
(e) Other assets	(k) Retained earnings
(f) Current liabilities

Instructions

Indicate by letter how each of the following usually should be classified. If an item should appear in a note to the financial statements, use the letter “N” to indicate this fact. If an item need not be reported at all on the balance sheet, use the letter “X.”

1. Prepaid insurance.

2. Stock owned in affiliated companies.

3. Unearned service revenue.

4. Advances to suppliers.

5. Unearned rent revenue.

6. Preferred stock.

7. Additional paid-in capital on preferred stock.

8. Copyrights.

9. Petty cash fund.

10. Sales taxes payable.

11. Accrued interest on notes receivable.

12. Twenty-year issue of bonds payable that will mature within the next year. (No sinking fund exists, and refunding is not planned.)

13. Machinery retired from use and held for sale.

14. Fully depreciated machine still in use.

15. Accrued interest on bonds payable.

16. Salaries that company budget shows will be paid to employees within the next year.

17. Discount on bonds payable. (Assume related to bonds payable in item 12.)

18. Accumulated depreciation—buildings.

19. Shares held by non-controlling stockholders.

Step by step solution

01

Definition of Retained earnings

Business entities keep some earnings for future prospectuses, such as paying dividends to the investors and re-investment. Such portion of earnings is known as retained earnings.

02

Classification of line Items

1. Prepaid insurance:(a) Current assets.

2. Stock owned in affiliated companies:(b) Investments.

3. Unearned service revenue:(f) Current liabilities

4. Advances to suppliers:(a) Current assets.

5. Unearned rent revenue:(f) Current liabilities

6. Preferred stock: (h) Capital stock

7. Additional paid-in capital on preferred stock:(i) Additional paid-in capital.

8. Copyrights:(d) Intangible assets.

9. Petty cash fund:(a) Current assets.

10. Sales taxes payable:(f) Current liabilities

11. Accrued interest on notes receivable:(a) Current assets.

12. Twenty-year issue of bonds payable that will mature within the next year. (No sinking fund exists, and refunding is not planned.):(f) Current liabilities

13. Machinery retired from use and held for sale:(e) Other assets.

14. Fully depreciated machine still in use:(c) Property, plant, and equipment.

15. Accrued interest on bonds payable:(f) Current liabilities

16. Salaries that the company budget shows will be paid to employees within the next year:(f) Current liabilities

17. Discount on bonds payable. (Assume related to bonds payable in item 12.):(f) Current liabilities

18. Accumulated depreciation—buildings:(c) Property, plant, and equipment.

19. Shares held by non-controlling stockholders: (i) Equity attributed to non-controlling interest

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