Classifications Where would each of the following items most likely be reported
ID: 2422096 • Letter: C
Question
Classifications
Where would each of the following items most likely be reported in a company's financial statements? Assume the monetary amount of each item is material.
1. Bad debts expense 2. Sales discounts taken 3. Depreciation expense on sales equipment 4. Loss from operations of discontinued Division B 5. Earnings per share 6. Gain on sale of land 7. Administrative salaries 8. Cash dividends declared and paid on common stock 9. Gain from sale of discontinued Division B 10. Loss on sale of equipment 11. Advertising expense 12. Merchandise inventory (ending) 13. Loss from write-off of obsolete inventory 14. Cash paid to acquire equipment 15. Unrealized increase in fair value of available-for-sale securitiesExplanation / Answer
1 Bad debts expense Profit & Loss Account (Indirect Expense) 2 Sales discounts taken Profit & Loss Account (Indirect Income) 3 Depreciation expense on sales equipment Profit & Loss Account (Indirect Expense) & Balance Sheet (reduce from the asset value) 4 Loss from operations of discontinued Division B Profit & Loss Account & Balance sheet (reduce from Reserves & Surplus) 5 Earnings per share Profit & Loss Account 6 Gain on sale of land Profit & Loss Account (Indirect Income) 7 Administrative salaries Profit & Loss Account (Indirect Expense) 8 Cash dividends declared and paid on common stock Balance Sheet (reduce from Reserves & Surplus) 9 Gain from sale of discontinued Division B Profit & Loss Account & Balance sheet (add to Reserves & Surplus) 10 Loss on sale of equipment Profit & Loss Account (Indirect Expense) 11 Advertising expense Profit & Loss Account (Indirect Expense) 12 Merchandise inventory (ending) Balance Sheet (Current asset) 13 Loss from write-off of obsolete inventory Profit & Loss Account (Indirect Expense) 14 Cash paid to acquire equipment Balance Sheet (reduce the cash & increase the equipment) 15 Unrealized increase in fair value of available-for-sale securities Notes to accounts