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The following balance sheet for the Los Gatos Corporation was prepared by a recently hired accountant....

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, 2021
Assets
Cash $ 78,000
Accounts receivable 137,000
Inventory 74,000
Machinery (net) 139,000
Franchise (net) 49,000
Total assets $ 477,000
Liabilities and Shareholders’ Equity
Accounts payable $ 88,000
Allowance for uncollectible accounts 24,000
Notes payable 93,000
Bonds payable 129,000
Shareholders’ equity 143,000
Total liabilities and shareholders’ equity $ 477,000


Additional Information:

  1. Cash includes a $39,000 restricted amount to be used for repayment of the bonds payable in 2025.
  2. The cost of the machinery is $228,000.
  3. Accounts receivable includes a $39,000 notes receivable from a customer due in 2024.
  4. The notes payable balance includes accrued interest of $24,000. Principal and interest are both due on February 1, 2022.
  5. The company began operations in 2016. Net income less dividends since inception of the company totals $54,000.
  6. 69,000 shares of no par common stock were issued in 2016. 200,000 shares are authorized.

Required:
Prepare a corrected, classified balance sheet. Use the additional information to help determine appropriate classifications and account balances. The cost of machinery and its accumulated depreciation are shown separately.

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Expert Solution

ekkarill92 answered 1 year ago
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