Question

Cone Corporation is in the process of preparing its December 31, 2018, balance sheet. There are some questions as to the proper classification of the following items:

1. $66,000 in cash restricted in a savings account to pay bonds payable. The bonds mature in 2022.
2. Prepaid rent of $40,000, covering the period January 1, 2019, through December 31, 2020.
3. Note payable of $232,000. The note is payable in annual installments of $36,000 each, with the first installment payable on March 1, 2019.
4. Accrued interest payable of $28,000 related to the note payable.
5. Investment in marketable securities of other corporations, $112,000. Cone intends to sell one-half of the securities in 2019.

Required:
Prepare a partial classified balance sheet to show how each of the above items should be reported.

Answer 1

CONE CORPORATION
Balance Sheet (Partial)
At December 31, 2018
Assets
Current assets:
Marketable securities	56000
Prepaid rent	20000
Investments:
Marketable securities	56000
Restricted cash	66000
Other assets:
Prepaid rent	20000
Liabilities and Shareholders' Equity
Current liabilities:
Interest payable	28000
Current maturities of long-term debt	36000
Long-term liabilities
Note payable	196000