Question

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	$	42,000
Accounts receivable		83,000
Inventories		56,000
Machinery (net)		121,000
Franchise (net)		31,000
Total assets	$	333,000
Liabilities and Shareholders’ Equity
Accounts payable	$	52,000
Allowance for uncollectible accounts		6,000
Note payable		57,000
Bonds payable		111,000
Shareholders’ equity		107,000
Total liabilities and shareholders’ equity	$	333,000

Additional information:

1. Cash includes a $21,000 restricted amount to be used for repayment of the bonds payable in 2022.
2. The cost of the machinery is $192,000.
3. Accounts receivable includes a $21,000 note receivable from a customer due in 2021.
4. The note payable includes accrued interest of $6,000. Principal and interest are both due on February 1, 2019.
5. The company began operations in 2013. Income less dividends since inception of the company totals $36,000.
6. 51,000 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.)

Answer 1

Amount $ Amount $ LOS GATOS CORPORATION Balance sheet as at December 31, 2018 :- Assets Current Assets :- Cash (42000-21000) Accounts receivable (83000-21000) Less: Allowance for Doubtful Accounts 21,000 62,000 (6,000) 56,000 1,33,000 21,000 21,000 42,000 Inventories Total Current Assets Long-Term Assets - Restricted Cash Note Receivable Total Long-Term Assets Fixed Assets :- Machinery Less: Accumulated Depreciation - Machinery Total Fixed Assets Intangible Assets :- Franchise (net) Total Assets 1,92,000 (71,000) 1,21,000 31,000 3,27,000 Amount $ Amount $ 52,000 6,000 51,000 1,09,000 Liabilities Current Liabilities :- Accounts Payable Interest Payable Note Payable Total Current Liabilities Long-Term Liabilities :- Bonds Payable Total Liabilities Shareholders equity :- Common Stock Retained Earnings Total Shareholders equity Total Liabilities and Shareholders equity 1,11,000 1,11,000 51,000 56,000 1,07,000 3,27,000