You have been asked to review the December 31, 2021, balance sheet for Champion Cleaning. After completing
Question:
You have been asked to review the December 31, 2021, balance sheet for Champion Cleaning. After completing your review, you list the following three items for discussion with your superior:
1. An investment of $30,000 is included in current assets. Management has indicated that it has no intention of liquidating the investment in 2022.
2. A $100,000 note payable is listed as a long-term liability, but you have determined that the note is due in 10 equal annual installments with the first installment due on March 31, 2022.
3. Deferred revenue of $60,000 is included as a current liability even though only two-thirds will be recognized as revenue in 2022, and the other one-third in 2023. Determine the appropriate classification of each of these items.
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
Step by Step Answer:
Intermediate Accounting
ISBN: 978-1260481952
10th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson, Wayne Thomas