In: Accounting
The following balance sheet for the Los Gatos Corporation was prepared by a recently hired accountant. In reviewing the statement you notice several errors. LOS GATOS CORPORATION Balance Sheet At December 31, 2018 Assets Cash $ 70,000 Accounts receivable 125,000 Inventories 70,000 Machinery (net) 135,000 Franchise (net) 45,000 Total assets $ 445,000 Liabilities and Shareholders’ Equity Accounts payable $ 80,000 Allowance for uncollectible accounts 20,000 Note payable 85,000 Bonds payable 125,000 Shareholders’ equity 135,000 Total liabilities and shareholders’ equity $ 445,000
Additional information: Cash includes a $35,000 restricted amount to be used for repayment of the bonds payable in 2022. The cost of the machinery is $220,000. Accounts receivable includes a $35,000 note receivable from a customer due in 2021. The note payable includes accrued interest of $20,000. Principal and interest are both due on February 1, 2019. The company began operations in 2013. Income less dividends since inception of the company totals $50,000. 65,000 shares of no par common stock were issued in 2013. 100,000 shares are authorized. Required: Prepare a corrected, classified balance sheet. (Amounts to be deducted should be indicated by a minus sign.)
LOS GATOS CORPORATION |
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Balance Sheet |
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At December 31, 2018 |
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Assets |
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Current assets: |
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Cash |
35000 |
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Accounts receivable, net of allowance for |
70000 |
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Inventories |
70000 |
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Total current assets |
175000 |
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Investments: |
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Bond sinking fund |
35000 |
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Note receivable |
35000 |
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Total investments |
70000 |
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Property, plant, and equipment: |
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Machinery |
220,000 |
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Less: Accumulated depreciation |
-85,000 |
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Net property, plant, and equipment |
135000 |
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Intangibles: |
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Franchise |
45000 |
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Total assets |
425000 |
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Liabilities and Shareholders' Equity |
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Current liabilities: |
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Accounts payable |
80,000 |
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Interest payable |
20000 |
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Note payable |
65000 |
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Total current liabilities |
165,000 |
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Long-term liabilities: |
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Bonds payable |
125000 |
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Shareholders’ equity: |
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Common stock, no par value; 100,000 shares |
85,000 |
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Retained earnings |
50,000 |
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Total shareholders’ equity |
135,000 |
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Total liabilities and shareholders’ equity |
425,000 |