Answer
a. Allowance for doubtful accounts- in current assets.
b. Merchandise held on consignment- should not appear on the consignee's balance sheet except possibly as a note to the financial statements.
c. Advances received on sales contract- are typically on a current liability and should be shown as such in the balance sheet.
d. Cash surrender value of life insurance-should appear as a long-term investment.
e. Land- should appear on property, plant and equipment unless held for investment purposes.
f. Merchandise out on consignment- should appear among the current assets under the heading of inventory.
g. Franchise-should be itemized in a section for intangible assets.
h. Accumulated depreciation of equipment- should be deducted on the equipment account.
i. Materials in transit- purchased F.O.B destination- clearly, it materials on transit are purchased under the F.O.B destination then they should appear on the balance sheet at any cost.
Work Step by Step
Ideally, its important to note that for the consignment notes are neither held under a contract of carriage nor as negotiable goods.
