Select your language

Suggested languages for you:
Log In Start studying!
Answers without the blur. Just sign up for free and you're in → Illustration

Q15Q.

Expert-verified
Intermediate Accounting (Kieso)
Found in: Page 237

Short Answer

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).

Items

Balance sheet section

Terminology

Treasury stock (recorded at cost)

Shareholders’ 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’ equity

Additional paid-in-capital

Long-term investments (pledged against bank loans payable)

Investments

Long-term investments (pledged against bank loans payable)

See the step by step solution

Step by Step Solution

Definition of Checking Account

A bank account maintained by the business entity or any individual that allows 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’s 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’s equity section.

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

Most popular questions for Business-studies Textbooks

Case 1: Uniroyal Technology Corporation

Uniroyal Technology Corporation (UTC), with corporate offices in Sarasota, Florida, is organized into three operating segments. The high-performance plastics segment is responsible for research, development, and manufacture of a wide variety of products, including orthopedic braces, graffiti-resistant seats for buses and airplanes, and a static-resistant plastic used in the central processing units of microcomputers. The coated fabrics segment manufactures products such as automobile seating, door and instrument panels, and specialty items such as waterproof seats for personal watercraft and stain-resistant, easy-cleaning upholstery fabrics. The foams and adhesives segment develops and manufactures products used in commercial roofing applications.

The following items relate to operations in a recent year.

1. Serious pressure was placed on profitability by sharply increasing raw material prices. Some raw materials increased in price 50% during the past year. Cost containment programs were instituted and product prices were increased whenever possible, which resulted in profit margins actually improving over the course of the year.

2. The company entered into a revolving credit agreement, under which UTC may borrow the lesser of $15,000,000 or 80% of eligible accounts receivable. At the end of the year, approximately $4,000,000 was outstanding under this agreement. The company plans to use this line of credit in the upcoming year to finance operations and expansion.

Instructions

(a) Should investors be informed of raw materials price increase, such as described in item 1? Does the fact that the company successfully met the challenge of higher prices affect the answer? Explain.

(b) How should the information in item 2 be presented in the financial statements of UTC?

Icon

Want to see more solutions like these?

Sign up for free to discover our expert answers
Get Started - It’s free

Recommended explanations on Business-studies Textbooks

94% of StudySmarter users get better grades.

Sign up for free
94% of StudySmarter users get better grades.