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: $70,000 in cash restricted in a savings account to pay bonds payable. The bonds mature in 2025. Prepaid rent of $44,000, covering the period January 1, 2022, through December 31, 2023. Notes payable of $240,000. The notes are payable in annual installments of $40,000 each, with the first installment payable on March 1, 2022. Accrued interest payable of $32,000 related to the notes payable. Investment in equity securities of other corporations, $120,000. 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:

The Partial Classified Balance Sheet of Cone Corporation for as December 31, 2021 is shown in the explanations.

Explanation:

The Question is to prepare the Assets and teh Liability Sections of a Classifed Balance Sheet for Cone Corporation

Cone Corporation

Balance Sheet (Classified)

As at December 31, 2021

                              ASSETS                                Amount (S)

Current Assets:

Marketable Securities                                       60,000

Prepaid Rent                                                      22,000

Investments

Bond Sinking Fund                                           70,000

Marketable Securities                                       60,000

Other Assets:

Prepaid Rent                                                      22,000

                          LIABILITIES AND EQUITY

Current Liabilities

Interest Payable                                                32,000

Current Maturities of Long-Term Debt            40,000

Long Term Liabilities

Notes payable                                                  200,000

Notes:

1) The Prepaid rent only reports half as current assets (usable within the next one year), the next half of $22,000 becomes other assets

2) The The Notes payable is in stallments, and the instalment due in 2022 is $40,000,  hence the balanc e(240,000- 40,000) 200,000 will go into notes payable remaining amount