Chapter 5 Solutions - EXERCISE 5-1(1520 minutes(a If the equity investment(preferred stock is readily marketable and held primarily for sale in the near

Chapter 5 Solutions - EXERCISE 5-1(1520 minutes(a If the...

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EXERCISE 5-1 (15–20 minutes) (a) If the equity investment (preferred stock) is readily marketable and held primarily for sale in the near term to generate income on short-term price differences, then the account should appear as a current asset and be included with trading securities. If, on the other hand, the preferred stock is not a trading security, it should be classified as available-for-sale. Available-for-sale securities are classified as current or noncurrent depending upon the circumstances. (b) If the company accounts for the treasury stock on the cost basis, the account should properly be shown as a reduction of total stockholders’ equity. (c) Stockholders’ equity. (d) Current liability. (e) Property, plant, and equipment (as a deduction). (f) If the warehouse in process of construction is being constructed for another party, it is properly classified as an inventory account in the current assets section. This account will be shown net of any billings on the contract. On the other hand, if the warehouse is being constructed for the use of this particular company, it should be classified as a separate item in the property, plant, and equipment section. (g) Current asset. (h) Current liability. (i) Retained earnings.
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EXERCISE 5-1 (Continued) (j) Current asset. (k) Current liability. (l) Current liability. (m) Current asset (inventory). (n) Current liability. EXERCISE 5-2 (15–20 minutes) 1. h. 11. b. 2. d. 12. f. 3. f. 13. a. 4. f. 14. h. 5 c. 15. c. 6. a. 16. b. 7. f. 17. a. 8. g. 18. a. 9. a. 19. g. 10. a. 20. f.
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EXERCISE 5-3 (15–20 minutes) 1. a. 10. f. 2. b. 11. a. 3. f. 12. f. 4. a. 13. a. or e. (preferably a.) 5 f. 14. c. and N.
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  • Spring '14
  • Balance Sheet, ........., Generally Accepted Accounting Principles

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