Chapter 2, Problem 3E

Classifying Accounts and Their Usual Balances

As described in a recent annual report. Digital Diversions, Inc. (DDI) designs, develops, and distributes videogames for computers and advanced game systems. DDI has been operating for only one full year.

Required:

For each of the following accounts from DDI’s recent balance sheet, complete the following table. Indicate whether the account is classified as a current asset (CA), noncurrent asset (NCA), current liability (CL), noncurrent liability (NCL), or stockholders’ equity (SE), and whether the account usually has a debit (dr) or credit (cr) balance.

Account	Balance Sheet Classification	Debit or Credit Balance
1. Land
2. Retained Earnings
3. Notes Payable (due in three years)
4. Accounts Receivable
5. Supplies
6. Common Stock
7. Equipment
8. Accounts Payable
9. Cash
10. Income Taxes Payable