Question

Recognition of normal balances The following items appeared in the accounting records of the Tape Box, a retail music store that also sponsors concerts. Classify each of the items as an asset, liability; revenue; or expense from the company's viewpoint. Also indicate the normal account balance of each item.a. The DVDs, CDs, albums, and video games held for sale to customers.b. A long-term loan owed to Citizens Bank.c. Promotional costs to publicize a concert.d. Daily sales of merchandise sold,e. Amounts due from customers,f.Land held as an investment,g. A new computer purchased for office use.h. Amounts to be paid in 10 days to suppliers,i.Amounts paid to property owner for rent.

Answer 1

Answer:

a. The DVDs, CDs, albums, and video games held for sale to customers.

Classification: Assets

b. A long-term loan owed to Citizens Bank.

Classification: Liability

c. Promotional costs to publicize a concert.

Classification: Expense

d. Daily sales of merchandise sold

Classification: Revenue

e. Amounts due from customers

Classification: Asset

f. Land held as an investment

Classification: Asset

g. A new computer purchased for office use.

Classification: Expense

h. Amounts to be paid in 10 days to suppliers

Classification: Liability

i. Amounts paid to property owner for rent.

Classification: Expense