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In: Accounting

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 $ 48,000
Accounts receivable 92,000
Inventories 59,000
Machinery (net) 124,000
Franchise (net) 34,000
Total assets $ 357,000
Liabilities and Shareholders’ Equity
Accounts payable $ 58,000
Allowance for uncollectible accounts 9,000
Note payable 63,000
Bonds payable 114,000
Shareholders’ equity 113,000
Total liabilities and shareholders’ equity $ 357,000


Additional information:

Cash includes a $24,000 restricted amount to be used for repayment of the bonds payable in 2022.

The cost of the machinery is $198,000.

Accounts receivable includes a $24,000 note receivable from a customer due in 2021.

The note payable includes accrued interest of $9,000. 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 $39,000.

54,000 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.)

Solutions

Expert Solution

Ans)

LOS GATOS CORPORATION

BALANCE SHEET

AT DECEMBER 31, 2018

ASSETS

Current Assets:

Cash (48000 - 24000) 24000

Accounts Receivable, net of allowance for

uncollectible accounts of $5,000 (92000 - 24000 - 9000) 59000

Inventories 59000

Total current assets 142000

Investments:

Bonds Payable 24,000

Note Receivable 24000

Total Investments 48,000

Property, Plant, and Equipment

Machinery 198,000

Less: Accumulated Depreciation (74,000)

Net Property, Plant, and Equipment 124000

Intangible assets:

Franchise 34000   

Total Assets   348,000

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:

Accounts payable $58,000

Interest payable $9000

Notes Payable $54000

Total Current Liabilities 121000

Long-term liabilities

Bonds Payable 114000

Shareholders' Equity

Common stock, no par value;

100,000 shares authorized;

54,000 shares issued and outstanding 74,000

Retained Earnings 39000

Total Shareholders' Equity 113,000

Total liabilities and shareholders' equity 348000

ekkarill92 answered 2 years ago
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