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Tootsie Roll Industries is engaged in the manufacture and sale of candy. Major products include Tootsie Roll, Tootsie Roll Pops, Tootsie Pop Drops, Tootsie Flavor Rolls, Charms, and Blow-Pop lollipops. The following items were listed on Tootsie Roll's recent income statement and balance sheet. Select each item from the balance sheet as an asset (A), liability (L), or shareholders' equity (SE) item and each item from the income statement as a revenue (R) or expense (E) item.

a. Bank loans
b. Selling, marketing, and administrative expenses
c. Accounts payable
d. Dividends payable
e. Retained earnings
f. Cash and cash equivalents
g. Accounts receivable
h. Provision for income taxes
i. Product cost of goods sold
j. Machinery and equipment
k. Net product sales
l. Inventories
m. Trademarks
n. Buildings
o. Land
p. Income taxes payable
q. Rental and royalty costs
r. Investments (in other companies)

Sagot :

hyderali230

Answer:

Balance Sheet

a. Bank loans ( L )

c. Accounts payable ( L )

d. Dividends payable ( L )

e. Retained earnings ( SE )

f. Cash and cash equivalents ( A )

g. Accounts receivable ( A)

h. Provision for income taxes ( L )

j. Machinery and equipment ( A )

l. Inventories ( A )

m. Trademarks ( A )

n. Buildings ( A )

o. Land ( A )

p. Income taxes payable ( L )

r. Investments (in other companies) ( A )

Income Statement

b. Selling, marketing, and administrative expenses ( E )

i. Product cost of goods sold ( E )

k. Net product sales ( R )

q. Rental and royalty costs ( E )

Explanation:

All the Assets, Liabilities, and Shareholder's equity are part of the balance sheet so, these are classified under the Balance sheet as A, L, and SE respectively.

Revenue and Expesne are incorporated in the income statement to calculate the net income for the period. Both of these are classified under the income statement as R and E respectively.

All those items over which the business has control and the right to receive an economic benefit from it are defined as assets. e.g Land

All the item which represents the obligation for the business to be fulfilled in future is classified as liabilities. e.g Bank loan

All the items associated with the shareholders of the company are classified as shareholder's equity. e.g Retained Earnings.

All the items which show the income for the flow of the economic benefit for the business are considered as Revenue. e.g Net sales.

All the items show the costs incurred to receive the benefit for the business are classified as the expense. e.g Rental expenses

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