Financial Accounting: An Integrated Statements Approach, 2nd Edition

Chapter 3 Accrual Accounting Concepts 135

Identify each of the six pairs of adjustments. For each adjustment, indicate the account,

whether the account is increased or decreased, and the amount of the adjustment. No account

is affected by more than one adjustment. Use the following format. The first adjustment is shown

as an example.

Adjustment Account Increase or Decrease Amount

1. Accounts Receivable Increase $7,140
   Fees Earned Increase 7,140

Barnes & Noble Inc.reportedProperty, Plant, and Equipmentof $1,677,836,000 and Accumulated

Depreciationof $991,187,000 at January 31, 2004.

a. What was the book value of the fixed assets at January 31, 2004?

b. Would the book values of Barnes & Noble’s fixed assets normally approximate their fair

market values?

Identify each of the following as (a) a current asset or (b) property, plant, and equipment:

1. Accounts Receivable 4. Office Equipment


2. Building 5. Prepaid Insurance


3. Cash 6. Supplies

At the balance sheet date, a business owes a mortgage note payable of $775,000, the terms of

which provide for monthly payments of $4,150. Explain how the liability should be classified on

the balance sheet.

Tudor Co. offers personal weight reduction consulting services to individuals. After all the ac-

counts have been closed on April 30, 2006, the end of the current fiscal year, the balances of se-

lected accounts from the ledger of Tudor Co. are as follows:

Accounts Payable $ 9,500 Prepaid Insurance $ 7,200

Accounts Receivable 21,850 Prepaid Rent 4,800

Accum. Depreciation—Equipment 21,100 Retained Earnings 74,200

Capital Stock 40,000 Salaries Payable 1,750

Cash? Supplies 1,800

Equipment 80,600 Unearned Fees 1,200

Prepare a classified balance sheet that includes the correct balance for Cash.

La-Z-Boy Inc.is one of the world’s largest manufacturers of furniture that is best known for its

reclining chairs. The following data (in thousands) were adapted from the 2004 annual report of

La-Z-Boy Inc.:

Accounts payable $122,576

Accounts receivable 337,770

Accumulated depreciation 296,942

Capital stock 269,316

(continued)

Exercise 3-26

Book value of fixed assets

Goal 4

Exercise 3-27

Classify assets

Goal 4

Exercise 3-28

Balance sheet classification

Goal 4

Exercise 3-29

Classified balance sheet

Goal 4

Total assets, $126,650

Exercise 3-30

Classified balance sheet

Goal 4

Total assets, $1,047,496