Financial Accounting Ch.2

Topics: Generally Accepted Accounting Principles, Balance sheet / Pages: 14 (1403 words) / Published: Feb 13th, 2015
E2-1, 2,5,7; P2-2A, 4A

E2-1. The following are the major balance sheet classifications:

Current assets (CA
Long-term investments (LTI)
Property, plant and equipment (PPE)
Intangible assets (IA)
Current liabilities (CL)
Long-term liabilities (LTL)
Stockholders’ equity (SE)

Classify each of the following financial statement items taken from Mordica Corporation’s balance sheet.

CL Accounts payable
CA Accounts receivable
PPE Accounts depreciation-equipment
PPE Buildings
CA Cash
CL Interest payable
IA Goodwill
CL Income taxes payable
CL Inventory
CA Stock investments (to be sold in 7 months)
PPE Land (in use)
LTL Mortgage payable
CA Supplies
PPE Equipment
CA Prepaid rent

E2-2. Classify each of the following financial statement items based upon the major balance sheet classifications listed in E2-1.

CA Prepaid advertising
PPE Equipment
IA Trademarks
CL Salaries and wages payable
CL Income taxes payable
SE Retained earnings
CA Accounts receivable
LTI Land (held for future use)
IA Patents
LTL Bonds payable
SE Common stock
PPE Accumulated depreciation
--Equipment
CL Unearned sales revenue
CA Inventory

E2-5. These items are taken from the financial statements of Donavan Co. at December 31, 2014.
Buildings $105,800
Accounts receivable 12,600
Prepaid insurance 3,200
Cash 11,840
Equipment 82,400
Land 61,200
Insurance expense 780
Depreciation expense 5,300
Interest expense 2,600
Common stock 60,000
Retained earnings (January 1, 2014) 40,000
Accumulated depreciation-buildings 45,600
Accounts payable 9,500
Notes payable 93,600
Accumulated depreciation-equipment 18,720
Interest payable 3,600

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