Question

Cone Corporation is in the process of preparing its December 31, 2021, balance sheet. There are some questions as to the proper classification of the following items: $65,000 in cash restricted in a savings account to pay bonds payable. The bonds mature in 2025. Prepaid rent of $39,000, covering the period January 1, 2022, through December 31, 2023. Notes payable of $230,000. The notes are payable in annual installments of $35,000 each, with the first installment payable on March 1, 2022. Accrued interest payable of $27,000 related to the notes payable. Investment in equity securities of other corporations, $110,000. Cone intends to sell one-half of the securities in 2022. Required: Prepare the asset and liability sections of a classified balance sheet to show how each of the above items should be reported.

Answer 1

Answer:

Assets                                    Liaiblities

current                                   current

cash                  65,000         interest payable 27,000

prepaid rent:     19,500

marketable       55,000

non-current                          non current

prepaid rent       19,500       notes payable 230,000

marketable sec 55,000

Explanation:

We must determinate the current and non-current portion of assets and liaibilities:

current assets: will convert to cash within a year or is cash

crrent liaibility: obligation within a year

prepaid rent:

it is for 2-years therefore half is current (within a year) and half is non current.

39,000 / 2 = 19,500

notes payables:

the interest accrued are current as will be paid within 2022

the principal don't

marketable securities: 110,000 and a half will be sold the rest will be kept.

Last, cash is alwas current as the definition of current is that can be converted into cahs within 12 months

The cash already is cash