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Assume that Denis Savard Inc. has the following accounts at the end of the current year.

1. Common Stock 14. Accumulated Depreciation-Buildings.
2. Discount on Bonds Payable. 15. Cash Restricted for Plant Expansion.
3. Treasury Stock (at cost). 16. Land Held for Future Plant Site.
4. Notes Payable (short-term). 17. Allowance for Doubtful Accounts.
5. Raw Materials 18. Retained Earnings.
6. Preferred Stock (Equity) Investments (long-term). 19. Paid-in Capital in Excess of Par-Common Stock.
7. Unearned Rent Revenue. 20. Unearned Subscriptions Revenue.
8. Work in Process. 21. Receivables-Officers (due in one year).
9. Copyrights. 22. Inventory (finished goods).
10. Buildings. 23. Accounts Receivable.
11. Notes Receivable (short-term). 24. Bonds Payable (due in 4 years).
12. Cash. 25. Noncontrolling Interest.
13. Salaries and Wages Payable.

Prepare a classified balance sheet in good form. (List Current Assets in order of liquidity. For Land, Treasury Stock, Notes Payable, Preferred Stock Investments, Notes Receivable, Receivables-Officers, Inventory, Bonds Payable, and Restricted Cash, enter the account name only and do not provide the descriptive information provided in the question.)

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Answer:

Since the answer requires the preparation of a balance sheet, please refer to the explanation section for the answer.

Explanation:

ASSETS

Long Term Assets

Property, Plant & Equipment

Intangible Assets

Long Term Investments

Total Non-current Assets

Current Assets

Cash

Inventory

Accounts Receivable

Notes Receivable

Total Current Assets

Total Assets

LIABILITIES AND EQUITY

Long Term Liabilities

Bonds Payable

Total Non-current Liabilities

Current Liabilities

Notes Payable

Accrued Expenses

Payables

Total Current Liabilities

Total Liabilities

Shareholders' Equity

Common Stock

Treasury Stock

Additional Paid in Capital

Minority Interest

Retained Earnings

Total Shareholders' Equity

Total Liabilities and Equity

Note that a classified balance sheet is one in which information about a company's equity, liabilities, and assets (along with the subsegments under each classification and category) is reported as on a specific date. Balance sheets can be created for any date but are usually created at the end of the financial year of the company or at the end of a shorter accounting period, for example, quarter end and semi-annual etc. The word classification is used since the balance sheet "classifies" certain types of account under one general account name. So rather than mentioning all the accounts that a company can possible have in the balance sheet, you include generic forms that club various accounts together. Details of all the accounts can be provided in the notes to the financial statements. This makes a balance sheet much easier to read for a user of the financial statement and makes for easier comparisons between years and between other companies.

The balance sheet provided above has, first of all, divided the accounts into 3 distinct classifications (represented in the accounting equation) which is assets, liabilities, and equity. These are then further broken into short term and long term (for example current assets and non-current assets). Finally, these are further broken down into line items encompassing a bunch of individual accounts.

So, for example, the line item that reads Property Plant & Equipment has clubbed the following accounts mentioned in the question: Accumulated Depreciation - Buildings, Land Held for Future Plant Site, and Buildings.

The following can be provided in the notes and reflects on how the categories were grouped line item wise.

(1) Intangible assets refer to copyright (which is long term in nature)

(2) Long term investments refer to preferred stock investments (long term)

(3) Cash refers to both Cash and Cash restricted for plant expansion

(4) Inventory refers to Raw Materials, Work in Process, and Finished Goods

(5) Accounts Receivable refers to Receivables - Officers and Allowance for Doubtful Accounts (which is a contra asset account)

(6) Bonds payable refers to Bonds Payable (due in 4 years) and discount on bonds

(7) Accrued Expenses refer to Unearned Rent Revenue and Unearned Subscriptions Revenue