Accounts from the July 31, 20x2 post-closing trial balance of Kinsella Hardware Corporation follow.

LO 5 Classified Balance Sheet income statement should break down each operating expense into its selling expense and admin-

1. After careful study, Alfa Company has determined that in the future its method of depreciating office furniture should be changed. The new method is adopted for the current year, and the change is noted in the financial statements.

2. In the past, Jafari Corporation has recorded operating expenses in general accounts for each classification (for example, Salaries Expense, Depreciation Expense, and Electricity Expense).

Management has determined that in spite of the additional recordkeeping costs, the company's istrative expense components.

3. The auditor of Mendez Corporation discovered that an official of the company may have authorised the payment of a 3,000 bribe to a local official. Management argued that because the item was so small in relation to the size of the company ( \(3,000,000\) in sales), the illegal payment should not be disclosed.

4. Brilliant Bookstore built a small addition to its main building to house a new computer games division. Because of uncertainty about whether the computer games division would succeed, the accountant took a prudent approach, recording the addition as an expense.

5. Since its origin ten years ago, Vazquez Company has used the same inventory method. Because there has been no change in the inventory method, the company does not declare in its financial statements what inventory method it uses.

In each case, state the qualitative characteristic or accounting constraint that is applicable, and state whether or not the treatment is in accord with that characteristic or constraint and with accounting standards. Briefly explain why.

REQUYRED From the information provided, prepare a classified balance sheet.

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Account Name Debit Credit Cash 31,000 33,000 Current Investments Notes Receivable Accounts Receivable Inventory Prepaid Rent Prepaid Insurance Sales Supplies 10,000 276,000 145,000 1,600 4,800 1,2801 Office Supplies 440 Deposit for Future Advertising 3,680 Building, Not in Use 49,600 Land 22,400 Delivery Equipment 41,200 Accumulated Depreciation, Delivery 28,400 Equipment Franchise Fee 4,000 Accounts Payable 114,600 Salaries Payable 5,200 Interest Payable 840 Long-Term Notes Payable 80,000 Share Capital 20,000 Share Premium 160,000 Retained Earnings 214,960