Question

Cone Corporation is in the process of preparing its December 31, 2018, balance sheet. There are some questions as to the proper classification of the following items:

a. $57,000 in cash restricted in a savings account to pay bonds payable. The bonds mature in 2022.

b. Prepaid rent of $31,000, covering the period January 1, 2019, through December 31, 2020.

c. Note payable of $214,000. The note is payable in annual installments of $27,000 each, with the first installment payable on March 1, 2019.

d. Accrued interest payable of $19,000 related to the note payable.

e. Investment in marketable securities of other corporations, $94,000. Cone intends to sell one-half of the securities in 2019.

Required:

Prepare a partial classified balance sheet to show how each of the above items should be reported

Answer 1

Cone corporation

Balancesheet (partial)

at december 31 2018

assets
current assets
marketable securities ($94,000*1/2 to be sold)	$47,000
prepaid rent ($31,000*1/2 of 2019)	15,500
investments
restricted cash (bond sinking fund)	57,000
marketable securities ($94,000*1/2 not to be sold)	47,000
other assets
Prepaid rent ($31,000* 1/2 for 2020)	15,500
Liabilities and shareholder's equity
current liabilities
Interest payable	19,000
current maturities of long term debt (to be paid in march 2019)	27,000
long term liabilities:
notes payable (214,000-27,000)	187,000