Cone Corporation is in the process of preparing its December 31, 2016, balance sheet. There are some questions as to the proper classification of the following items1. $62,000 in cash restricted in a savings account to pay bonds payable. The bonds mature in 20202. Prepaid rent of $36,000, covering the period January 1, 2017, through December 31, 20183. Note payable of $224,000. The note is payable in annual installments of $32,000 each, with the first installment payable on March 1, 20174. Accrued interest payable of $24,000 related to the note payable5. Investment in marketable securities of other corporations, $104,000. Cone intends to sell one-half of the securities in 2017Required:Prepare a partial classified balance sheet to show how each of the above items should be reported

Question

contestada

Respuesta :

mltn1980 mltn1980 · Answer 1 · 2019-10-15T04:49:43+02:00

Answer:

Account of Current Assets , the criteria is to have a liquidity speed less of one year

Cash

Prepaid Rent - Half of the prepaid rent it's on Non-Current Assets because it cover part of year 2018.

Investment in Equity Sec - Half of the Investment it's on Current Assets because part will be sell on 2017.

Account of Non Current Assets , the criteria is to have a liquidity speed more than one year and are known as fixed assets

Investment in Equity Sec

Prepaid Rent

Account of Current Liabilities , the criteria is to have a liquidity speed less of one year

Interest Payable - Accrued interest to be paid corresponds to the note payable.

Note Payable - Correspond to the installments to be paid on March 2017.

Account of Non-Current Liabilities , the criteria is to have a liquidity speed more than of one year

Note Payable - The note payable with mature more than one year.

Bond Payable - Bonds to mature in 2020 with the reserve on cash.

Explanation:

2016 Balance Sheet

$62,000 Cash

$18,000 Prepaid Rent

$52,000 Investment in Equity Sec

$132,000 TOTAL CURRENT ASSETS

$52,000 Investment in Equity Sec

$18,000 Prepaid Rent

$70,000 TOTAL NONCURRENT ASSETS

$202,000 TOTAL ASSETS

$24,000 Interest Payable

$32,000 Note Payable

$56,000 TOTAL CURRENT LIABILITIES

$192,000 Note Payable

$62,000 Bond Payable

$254,000 TOTAL NONCURRENT LIABILITIES

$310,000 TOTAL LIABILITIES