Question

Cone Corporation is in the process of preparing its December 31, 2021, balance sheet. There are...

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:

  1. $61,000 in cash restricted in a savings account to pay bonds payable. The bonds mature in 2025.
  2. Prepaid rent of $35,000, covering the period January 1, 2022, through December 31, 2023.
  3. Notes payable of $222,000. The notes are payable in annual installments of $31,000 each, with the first installment payable on March 1, 2022.
  4. Accrued interest payable of $23,000 related to the notes payable.
  5. Investment in equity securities of other corporations, $102,000. 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.

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Answer #1

Answer:

CONE CORPORATION
Balance Sheet (Partial)
At December 31, 2021
Assets
Current assets
Marketable securities (102000*50%) 51000
Prepaid rent (35000*50%) 17500
Investments
Restricted cash 61000
Marketable securities 51000
Other assets
Prepaid rent 17500
Liabilities and Shareholders' Equity
Current liabilities
Interest payable 23000
Current maturities of long-­term debt 31000
Long­-term liabilities
Note payable (222000-31000) 191000
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