You are an auditor and you have been asked to review the December 31, 2024, balance sheet for Locust Point Incorporated. After four days of hard work, you have completed the review and you meet with your supervisor to discuss the following 3 items: 1. An investment of $34,000 is included in current assets. Management has indicated it has no intention of liquidating the investment in 2025. 2. A $140,000 note payable is listed as a long-term liability, but you have determined that the note is due in 10 equal annual installments with the first installment due on March 31, 2025. 3. Deferred revenue of $72,000 is included as a current liability even though only two-thirds will be recognized as revenue in 2025, and the other one-third in 2026. Determine the appropriate classification of each of these items. Note: If no entry is required for classification, choose "No entry". Items 1. Investment 2. Installment note 3. Deferred revenue Amount Current Classification Amount Long-term Classification
You are an auditor and you have been asked to review the December 31, 2024, balance sheet for Locust Point Incorporated. After four days of hard work, you have completed the review and you meet with your supervisor to discuss the following 3 items: 1. An investment of $34,000 is included in current assets. Management has indicated it has no intention of liquidating the investment in 2025. 2. A $140,000 note payable is listed as a long-term liability, but you have determined that the note is due in 10 equal annual installments with the first installment due on March 31, 2025. 3. Deferred revenue of $72,000 is included as a current liability even though only two-thirds will be recognized as revenue in 2025, and the other one-third in 2026. Determine the appropriate classification of each of these items. Note: If no entry is required for classification, choose "No entry". Items 1. Investment 2. Installment note 3. Deferred revenue Amount Current Classification Amount Long-term Classification
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Edit View History Bookmarks Profiles Tab Window Help
Question 4 - Proctoring Enable X
2
getproctorio.com/secured#lockdown
octoring Enabled: Chapter 3 Required Homewor... i
W
+
4
You are an auditor and you have been asked to review the December 31, 2024, balance sheet for Locust Point Incorporated. After
four days of hard work, you have completed the review and you meet with your supervisor to discuss the following 3 items:
Determine the appropriate classification of each of these items.
Note: If no entry is required for classification, choose "No entry".
1. Investment
2. Installment note
3. Deferred revenue
→
Items
3
E
с
1. An investment of $34,000 is included in current assets. Management has indicated it has no intention of liquidating the investment
in 2025.
2. A $140,000 note payable is listed as a long-term liability, but you have determined that the note is due in 10 equal annual
installments with the first installment due on March 31, 2025.
3. Deferred revenue of $72,000 is included as a current liability even though only two-thirds will be recognized as revenue in 2025,
and the other one-third in 2026.
$
4
Amount
R
do LO
%
Current
5
G Search or type URL
Classification
T
Saved
< Prev
6
Y
4 of 5
MacBook Pro
Amount
&
7
I
U
Next >
☆
Long-term
8
Classification
+
0
9
g
<
Help
0
យ
50%
Save & Exit
☆
Sat
图
Sub
+ 11
Expert Solution
Step 1
| Current | Long Term | ||||
| Item | Amount | Classification | Amount | Classification | |
| 1. | Investment | $ 0 | No Entry | $34,000 | Investments (Long Term Asset) |
| 2. | Instalment Note | $14,000 | Current Liabilities | $126,000 | Long Term Liabilities |
| 3. | Deferred Revenue | $48,000 | Current Liabilities | $24,000 | Long Term Liabilities |
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education