E6-1. Classification of Assets and Liabilities. Darin Development Company engaged in the following transactions during the current year.

1. Borrowed $400,000 from Pleasantville Community Bank at the beginning of the year. The terms of the note call for annual payments of $50,000. The first annual payment has not been paid as of the end of the current year. (Ignore any interest payable.)
2. Made sales for the current year amounting to $2,900,000 with 40% collected during the current year.
3. Acquired inventory costing $345,000 on account.
4. Incurred taxes due on the current year's income of $76,000.
5. Paid $60,000 for a three-year insurance policy in advance at the beginning of the current year.
6. Acquired new equipment costing $890,000 by borrowing the full amount at the end of the current year. The loan is due in 5 years.

Required

Identify and classify the noncash assets and liabilities resulting from the current-year transactions. Assume that your classification is made as of the end of the current year.

(Gordon 267)

Gordon, Elizabeth A., Jana Raedy, Alexander Sannella. Intermediate Accounting. Pearson Learning Solutions, 05/2016. VitalBook file.

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