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Exercise 5-2 Presented below are the captions of Faulk Company’s balance sheet. Indicate where each of the following items would be classified. Balance Sheet Accounts Balance Sheet Classification 1. Preferred stock. 2. Goodwill. 3. Salaries and wages payable 4. Accounts payable 5. Buildings. 6. Equity investments (to be sold in the next year). 7. Current maturity of long-term debt. 8. Premium on bonds payable. 9. Allowance for doubtful accounts. 10. Accounts receivable. 11. Cash surrender value of life insurance. 12. Notes payable (due next year). 13. Supplies. 14. Common stock. 15. Land. 16. Bond sinking fund. 17. Inventory. 18. Prepaid insurance. 19. Bonds payable. 20. Income taxes payable.
Expert Answer
| BALANCE SHEET ACCOUNTS | BALANCESHEET CLASSIFICATION |
| preferred stock | liabilities – shareholders equity |
| goodwill | assets- fixed assets |
| salaries and wages payable | liabilities – current liabilities |
| accounts payable | liabilities – current liabilities |
| buildings | assets – fixed assets |
| equity investments | assets- current assets |
| current maturity of long-term debt | libilities- current liabilities |
| premium on bonds payable | liabilities – long term liabilities |
| allowance for doubtful accounts | deduct from debtors or accounts recievable |
| accounts receivable | assets- current assets |
| cash surrender value of life insurance | asset- other current asset |
| notes payable | libilities- current liabilities |
| supplies | assets- current assets |
| common stock | liabilities – owners equity |
| land | asstes – fixed assets |
| bond sinking fund | assets – non current asst |
| inventory | assets – current assets |
| prepaid insurance | assets – current assets |
| bonds payable | liability – long term liability |
| income taxes payble | liability – current liability |
