Exercise 3-8 (algo) balance sheet; current versus long-term classification [lo3-2, 3-3] cone corporation is in the process of preparing its december 31, 2021, balance sheet. there are some questions as to the proper classification of the following items: $55,000 in cash restricted in a savings account to pay bonds payable. the bonds mature in 2025. prepaid rent of $29,000, covering the period january 1, 2022, through december 31, 2023. notes payable of $210,000. the notes are payable in annual installments of $25,000 each, with the first installment payable on march 1, 2022. accrued interest payable of $17,000 related to the notes payable. investment in equity securities of other corporations, $90,000. cone intends to sell one-half of the securities in 2022. required: prepare the asset and liability sections of a classified balance sheet to show how each of the above items should be reported.

Account of Current Assets , the criteria is to have a liquidity speed less of one year

Cash

Prepaid Rent - Half of the prepaid rent it's on Non-Current Assets because it cover part of year 2023.

Investment in Equity Sec - Half of the Investment it's on Current Assets because part will be sell on 2022.  

Account of Non Current Assets , the criteria is to have a liquidity speed more than one year and are known as fixed assets

Investment in Equity Sec

Prepaid Rent

Account of Current Liabilities , the criteria is to have a liquidity speed less of one year

Interest Payable - Accrued interest to be paid corresponds to the note payable.  

Note Payable - Correspond to the installments to be paid on March 2022.  

Account of Non-Current Liabilities , the criteria is to have a liquidity speed more than of one year

Note Payable - The note payable with mature more than one year.  

Bond Payable - Bonds to mature in 2025 with the reserve on cash.  

Explanation:

2021Balance Sheet

$55,000  Cash

$14,500  Prepaid Rent

$45,000  Investment in Equity Sec

$114,500  TOTAL CURRENT ASSETS  

$45,000  Investment in Equity Sec

$14,500  Prepaid Rent

$59,500   TOTAL NONCURRENT ASSETS  

$174,000  TOTAL ASSETS  

$17,000            Interest Payable  

$25,000   Note Payable  

$42,000   TOTAL CURRENT LIABILITIES  

$185,000  Note Payable  

$55,000   Bond Payable  

$240,000  TOTAL NONCURRENT LIABILITIES  

$282,000  TOTAL LIABILITIES  

answer; specific performance;

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