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Chapter 5: 3 (page 239)

Included in Outkast Company’s December 31, 2017, trial balance are the following accounts: Prepaid Rent \(5,200, Debt Investments (to be held to maturity until 2020) \)56,000, Unearned Fees \(17,000, Land (held for investment) \)39,000, and Notes Receivable (long-term) $42,000. Prepare the long-term investments section of the balance sheet.

Short Answer

Expert verified

The long-term investment of the business entity totals$95,000.

Step by step solution

01

Long-Term Investment

The investment held by the individual or the business entity for a period exceeding one year is known as a long-term investment. Such assets are held for generating capital gains in the future period.

02

Total Long-Term investment

Particular

Amount $

Investment

$56,000

Land

$39,000

Total long-term investment

$95,000

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Most popular questions from this chapter

2. Current assets under IFRS are listed generally:

(a) by importance.

(b) in the reverse order of their expected conversion to cash.

(c) by longevity.

(d) alphabetically.

(Preparation of a 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 Investments (long-term).

7. Unearned Rent Revenue.

8. Work in Process.

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 over 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 Interest.

Instructions

Prepare a classified balance sheet in good form. (No monetary amounts are necessary.)

BE5-3 (L03) Included in Outkast Company’s December 31, 2017, trial balance are the following accounts: Prepaid Rent \(5,200, Debt Investments (to be held to maturity until 2020) \)56,000, Unearned Fees \(17,000, Land (held for investment) \)39,000, and Notes Receivable (long-term) $42,000. Prepare the long-term investments section of the balance sheet.

Crane Corporation has the following accounts included in its December 31, 2017, trial balance: Equity Investments (trading) \(21,000, Goodwill \)150,000, Prepaid Insurance \(12,000, Patents \)220,000, and Franchises $130,000. Prepare the intangible assets section of the balance sheet.

(Critique of Balance Sheet Format and Content) The following is the balance sheet of Sameed Brothers Corporation (000s omitted).

SAMEED BROTHERS CORPORATION

BALANCE SHEET

DECEMBER 31, 2017

Assets

Current assets

Cash

\(26,000

Marketable securities

18,000

Accounts receivables

25,000

Inventory

20,000

Supplies

4,000

Stock investment in subsidiary company

20,000

\)113,000

Investment

Treasury stock

25,000

Property, Plant and Equipment

Building and land

91,000

Less: Reserve for depreciation

(31,000)

60,000

Other assets

Cash Surrender value of life insurance

19,000

Total assets

\(217,000

Liabilities and Stockholder’s equity

Accounts payable

\)22,000

Reserve for income taxes

15,000

Customer’s account with credit balance

1

\(37,001

Deferred credit

Unamortized premium on bonds payable

2,000

Long term liabilities

Bonds payable

60,000

Total liabilities

99,001

Common stock

Common stock at par \)5

85,000

Earned surplus

24,999

Cash Dividend declared

8,000

117,999

Total liabilities and Stockholder’s equity

$217,000

Instructions

Evaluate the balance sheet presented. State briefly the proper treatment of any item criticized
See all solutions

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