E2-3 Classifying Accounts and Their Usual Balances [LO 2-1, LO 2-3, LO 2-4] As d

Question

E2-3 Classifying Accounts and Their Usual Balances [LO 2-1, LO 2-3, LO 2-4] As described in a recent annual report, Digital Diversions, Inc. (DDI), designs, develops, and distributes video games for computers and advanced game systems. DDl 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 (drn or credit (crh balance. Balance Sheet Classification Debit or Credit Balance Account 1.Land 2. Retained Earnings 3. Notes Payable (due in three years) 4. Accounts Receivable 5. Supplies 6. Common Stock Equipment 8. Accounts Payable .Cash 10. Income Taxes Payable

Explanation / Answer

Answer:

balance sheet

Debit or

Classification

Credit balance

1

Land -

(NCA )-Non Current Assets

Debit

2

Retained Earnings -

(SE )- Stock Holder's Equity

Credit

3

Notes Payable (due in three years)

(NCL )-Non Current Liability

Credit

4

. Accounts Receivable

(CA)- Current Assets

Debit

5

Supplies -

(CA)- Current Assets

Debit

6

Common stock-

(SE )- Stock Holder's Equity

Credit

7

Equipment -

(NCA )-Non Current Assets

Debit

8

Account Payable -

(CL ) - Current liability

Credit

9

Cash -

(CA)- Current Assets

Debit

10

Income Taxes Payable -

(CL ) - Current liability

Credit

balance sheet

Debit or

Classification

Credit balance

1

Land -

(NCA )-Non Current Assets

Debit

2

Retained Earnings -

(SE )- Stock Holder's Equity

Credit

3

Notes Payable (due in three years)

(NCL )-Non Current Liability

Credit

4

. Accounts Receivable

(CA)- Current Assets

Debit

5

Supplies -

(CA)- Current Assets

Debit

6

Common stock-

(SE )- Stock Holder's Equity

Credit

7

Equipment -

(NCA )-Non Current Assets

Debit

8

Account Payable -

(CL ) - Current liability

Credit

9

Cash -

(CA)- Current Assets

Debit

10

Income Taxes Payable -

(CL ) - Current liability

Credit

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