Exam 2 Review - Bonus quiz 8

Current assets are presented in the balance sheet in order of their liquidity

Price of the notes receivable = PV(annuity which is periodic payments of interest) + PV(face value of the notes)

Land Held for Future Plant Site is classified as Investments

When computing the value of notes receivable, we use market rate to determine the present value factors

Preferred Stock Investments (long-term) is classified as Capital Stock

Le Company has Petty cash and change funds, $1,200. This is classified as cash

Common Stock is classified as Capital Assets

Record interest revenue of a notes receivable: Dr. Cash/ Cr. Interest Revenue and Cr. Discounts on Notes Receivable

Accumulated Depreciation-Buildings is classified as Plant Assets

Treasury Stock is classified as Capital Stock

Cash purchase of treasury stock is cash flow from financing activities

Making and collecting loans and disposing of property, plant, and equipment are cash flow from financing activities

Discounts on Notes Receivable is classified as Current Assets

Periodic payment of interest of a notes receivable = face value of the notes * market value

Receivables are valued based on their fair value

Capitalized Leases is classified as Intangible Assets

Record the purchase of a notes receivable: Dr. Notes Receivable at Face value

Land used as plant site is classified as Plant Assets

Carrying amount of a notes receivable = face value of the notes - balance of discounts on notes receivable