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ACCT 1201 (75)
Chapter 5

Chapter 5 Activity Solution.doc

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ACCT 1201
Ronen Gal-or

Chapter 5 Activity 1. CLASSIFYING ACCOUNTS ON FINANCIAL STATEMENTS The following is a list of financial statement items and amounts from a recent income statement and balance sheet of Basic Corporation. All accounts have normal balances. The company’s year ended on December 31, 2010. For each financial statement item listed, indicate whether it appears on the income statement or balance sheet. Income Balance Financial Statement Item Amount Statement Sheet Accounts Payable $ 41,000 X Accounts Receivable 262,000 X Accrued Expenses Payable 37,000 X Cash and Cash Equivalents 125,000 X Contributed Capital 150,000 X Cost of Sales 350,000 X General and Administrative Expenses 75,000 X Income Tax Expense 32,000 X Intangible Assets, Net 85,000 X Interest and Other Income, Net 10,000 X Inventory 167,000 X Notes Payable (due In 2012) 433,000 X Other Current Assets 5,000 X Other Current Liabilities 89,000 X Other Noncurrent Assets 15,000 X Prepaid Expenses 31,000 X Property, Plant and Equipment, Net 184,000 X Research and Development Costs 250,000 X Retained Earnings 161,000 X Sales and Service Revenues 943,000 X Selling Expenses 125,000 X Short-Term Investments 57,000 X 2. PREPARATION OF BALANCE SHEET Using the information provided in Handout 5-1, prepare in good form a classified balance sheet as of December 31, 2008. Basic Corporation Balance Sheet December 31, 2010 Assets Current Assets: Cash and Cash Equivalents $125,000 Short-Term Investments 57,000 Accounts Receivable 262,000 Inventory 167,000 Prepaid Expenses
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