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E5-3 Assume that Masters Enterprises

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E5-3 (Classification of Balance Sheet Accounts) Assume that Masters Enterprises uses the following
headings on its balance sheet.

(a) Current assets. (f) Current liabilities.
(b) Investments. (g) Long-term liabilities.
(c) Property, plant, and equipment. (h) Capital stock.
(d) Intangible assets. (i) Paid-in capital in excess of par.
(e) Other assets. (j) Retained earnings.

Instructions
Indicate by letter how each of the following usually should be classified. If an item should appear in a
note to the financial statements, use the letter “N” to indicate this fact. If an item need not be reported at
all on the balance sheet, use the letter “X.”

1. Unexpired insurance. 12. Twenty-year issue of bonds payable that will
2. Stock owned in affiliated companies. mature within the next year. (No sinking fund
3. Unearned subscriptions revenue. exists, and refunding is not planned.)
4. Advances to suppliers. 13. Machinery retired from use and held for sale.
5. Unearned rent revenue. 14. Fully depreciated machine still in use.
6. Preferred stock. 15. Accrued interest on bonds payable.
7. Additional paid-in capital on 16. Salaries that company budget shows will be paid
preferred stock. to employees within the next year.
8. Copyrights. 17. Discount on bonds payable. (Assume related to
9. Petty cash fund. bonds payable in No. 12.)
10. Sales tax payable. 18. Accumulated depreciation.
11. Accrued interest on notes receivable.

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