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, 2021 Assets Cash Accounts receivable Inventory Machinery (net) Franchise (net) Total assets Liabilities and Shareholders' Equity Accounts payable Allowance for uncollectible accounts Notes payable Bonds payable Shareholders' equity Total liabilities and shareholders' equity $ 68,000 122,000 69,000 134,000 44,000 $ 437,000 $ 78,000 19,000 83,000 124,000 133,000 $ 437,000 Additional Information: 1. Cash includes a $34,000 restricted amount to be used for repayment of the bonds payable in 2025. 2. The cost of the machinery is $218,000. 3. Accounts receivable includes a $34,000 notes receivable from a customer due in 2024. 4. The notes payable balance includes accrued interest of $19,000. 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 $49,000. 6. 64,000 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. (Amounts to be deducted should be indicated by a minus sign.)

Answer 1

Assets
Current Assets
Cash		34000
Accounts Receivable	88000
Less: Allowances for Uncollectiable accounts	-19000
Net Accounts Receivable		69000
Inventory		69000
Investments		68000
Cash for restricted use	34000
Accounts Receivable in 2024	34000
Property Plant & Equipment
Cost of Machinery	218000
Less: Accumulated Depreciation	84000
Net Property Plant and Equipment		134000
Intangible Assets
Francise		44000
Total Assets		418000
Liabilities and Shareholder's Equity
Current Liability
Accounts Payable	78000
Notes Payable	83000
Total Current Liabilities		161000
Long Term Liabilities
Bonds Payable	124000
Total Long term Liabilities		124000
Shareholders' Equity
Equity Share Capital	84000
Retained Earnings	49000
Total Shareholders' Equity		133000
Total liabilities and shareholders fund		418000