Chapter 5: E5-4 (page 241)

(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.)

Short Answer

Expert verified

The assets and liabilities are classified based on their due date and when they will benefit the business entity.

Step by step solution

Definition of Unearned Revenue

The revenue of the business entity, which is considered a liability, is known as unearned revenue. It is considered a liability because it is theadvance payment made by the customer for which the business entity is liable to provide service and products in the future.

Classified Balance-Sheet

Particular	Amount $	Amount $
Assets
Current assets:
Cash
Less: Restricted cash for plant expansion
Account receivable
Less: Allowance for doubtful accounts
Note receivable (short term)
Receivables – Officer (Due in one year)
Inventory:
Raw material
Work-in-progress
Finished goods

Long-Term investment
Preferred stock investment
Land held for the future plant site

Property, plant and equipment
Building
Less: Accumulated depreciation - building

Intangible assets
Copyrights
Total assets

Liabilities
Current liabilities:
Salaries and wages payable
Unearned rent revenue
Note payable (short-term)
Unearned subscription revenue
Total current liabilities

Non-Current liabilities
Bond payable (in 4 years)
Less: Discount on bonds payable
Non-controlling interest
Total non-current liabilities
Total liabilities

Stockholder’s equity
Common stock
Paid-in capital over par - common stock
Total paid-in capital
Retained earnings
Total paid-in capital and retained earnings
Less: Treasury stock
Total stockholder’s equity
Total liabilities and stockholder’s equity

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Particular	Debit	Credit
Cash	\(?
Supplies	1,200
Prepaid insurance	1,000
Equipment	48,000
Accumulated depreciation – Equipment		\)4,000
Trademarks	950
Accounts payable		10,000
Salaries and wages payable		500
Unearned service revenue		2,000
Bonds payable (due 2024)		9,000
Common stock		10,000
Retained earnings		25,000
Service revenue		10,000
Salaries and wages expenses	9,000
Insurance expenses	1,400
Rent expenses	1,200
Interest expenses	900
Total	\(?	\)?

Short Answer

Step by step solution

Definition of Unearned Revenue

Classified Balance-Sheet

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