Q15Q. In what section of the balance s... [FREE SOLUTION]

Chapter 5: Q15Q. (page 237)

In what section of the balance sheet should the following items appear, and what balance sheet terminology would you use?
(a) Treasury stock (recorded at cost).
(b) Checking account at bank.
(c) Land (held as an investment).
(d) Sinking fund.
(e) Unamortized premium on bonds payable.
(f) Copyrights.
(g) Pension fund assets.
(h) Premium on common stock.
(i) Long-term investments (pledged against bank loans payable).

Short Answer

Expert verified

Items	Balance sheet section	Terminology
Treasury stock (recorded at cost)	Shareholders鈥� equity	Treasury stock (recorded at cost)
Checking account at a bank	Current asset	Cash at bank
Land (held as an investment)	Long-term investment	Land held as an investment
Sinking fund	Long-term investment	Sinking Fund
Unamortized premium on bonds payable	Non-Current liabilities	Unamortized premium on bonds payable
Copyrights	Intangible Asset	Copyrights
Pension fund assets	Investments	Employee pension funds
Premium on common stock	Shareholders鈥� equity	Additional paid-in-capital
Long-term investments (pledged against bank loans payable)	Investments	Long-term investments (pledged against bank loans payable)

Step by step solution

Definition of Checking Account

A bank account maintained by the business entity or any individual thatallows unlimited deposits and withdrawal is a checking account. It is different from a savings account.

Balance sheet section of each account

1. Treasury stock is a contra-equity account reported in the shareholder鈥檚 equity section and deduction from the retained earnings.

2. Checking account is the bank account and reported in the current asset as cash in the bank.

3. Land held for investment will be treated as an investment and reported in long-term investment on the asset side.

4. Sinking fund is also treated as a long-term investment and reported on the asset side of the balance sheet.

5. Unamortized premium on bonds payable is reported in the non-current liabilities section and deducted from the bonds payable.

6. Copyrights are reported under intangible assets on the asset side of the balance sheet.

7. Pension fund assets are reported under-investment as employee pension funds on the asset side of the balance sheet.

8. Premium on common stock is reported as additional paid-in-capital in the shareholder鈥檚 equity section.

9. Long-term investment given as collateral must be reported on the asset side as an investment along with collateral information.

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Particular	Debit	Credit
Cash	\(197,000
Sales Revenue		\)8,100,000
Debt investment (trading) (at cost \(145,000)	153,000
Cost of goods sold	4,800,000
Debt investment (long-term)	299,000
Equity Investment (long-term)	277,000
Notes payable (Short-term)		90,000
Account payable		455,000
Selling expenses	2,000,000
Investment revenue		63,000
Land	260,000
Buildings	1,040,000
Dividend payable		136,000
Accrued Liabilities		96,000
Accounts Receivable	435,000
Accumulated depreciation 鈥� Building		152,000
Allowance for doubtful accounts		25,000
Administrative expenses	900,000
Interest expenses	211,000
Inventory	597,000
Gain		80,000
Notes payable		900,000
Equipment	600,000
Bonds payable		1,000,000
Accumulated depreciation 鈥� Equipment		60,000
Franchises	160,000
Common stock		1,000,000
Treasury stock	191,000
Patents	195,000
Retained Earnings		78,000
Paid-in-capital in excess of par		80,0000
Total	\)12,315,000	$12,315,000

Particular	Debit	Credit
Cash	\(?
Supplies	1,200
Prepaid insurance	1,000
Equipment	48,000
Accumulated depreciation 鈥� Equipment		\)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	\(?	\)?

MADRASAH CORPORATION
BALANCE SHEETS
Assets	Dec 31, 2017	Jan 1, 2017	Inc./Dec.
Cash	\(20,000	\)13,000	\(7,000 Inc.
Accounts receivable	106,000	88,000	18,000 Inc.
Equipment	39,000	22,000	17,000 Inc.
Less: Accumulated depreciation 鈥� Equipment	17,000	11,000	6,000 Inc.
Total	\)148,000	\(112,000

Liabilities and Stockholder鈥檚 equity
Account payable	\)20,000	\(15,000	5,000 Inc.
Common stock	100,000	80,000	20,000 Inc.
Retained earnings	28,000	17,000	11,000 Inc.
Total	\)148,000	\(112,000

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Short Answer

Step by step solution

Definition of Checking Account

Balance sheet section of each account

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