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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, 2018
Assets
Cash $ 72,000
Accounts receivable 128,000
Inventories 71,000
Machinery (net) 136,000
Franchise (net) 46,000
Total assets $ 453,000
Liabilities and Shareholders’ Equity
Accounts payable $ 82,000
Allowance for uncollectible accounts 21,000
Note payable 87,000
Bonds payable 126,000
Shareholders’ equity 137,000
Total liabilities and shareholders’ equity $ 453,000


Additional information:

Cash includes a $36,000 restricted amount to be used for repayment of the bonds payable in 2022.

The cost of the machinery is $222,000.

Accounts receivable includes a $36,000 note receivable from a customer due in 2021.

The note payable includes accrued interest of $21,000. 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 $51,000.

66,000 shares of no par common stock were issued in 2013. 200,000 shares are authorized.

Required:
Prepare a corrected, classified balance sheet. (Amounts to be deducted should be indicated by a minus sign.)

Solutions

Expert Solution

LOS GATOS CORPORATION
Balance Sheet
At December 31, 2018
Assets
Curent Assets
Cash (72000-36000) $36,000
Accounts Receivable (net) $71,000
(128000-36000-21000)
Inventories $71,000
Total Current Assets $178,000
Investments
Restricted Cash $36,000
Note Receivable $36,000
Total Investments $72,000
Property,Plant & Equipment
Machinery $222,000
Less: Accumulated Depriciation
($222000-136000)		 $86,000
Net property, plant, and equipment $136,000
Intangible Assets
Franchise (Net) $46,000
Total Assets $432,000
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable $82,000
Interest payable $21,000
Note payable (87000-21000) $66,000
Total current liabilities $169,000
Long­term liabilities
Bonds payable $126,000
Shareholders' equity
Common stock (137000-51000) $86,000
Retained earnings $51,000
Total Shareholder's equity $137,000
Total Liabilities and Shareholders' Equity $432,000

ekkarill92 answered 1 year ago
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