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. $ 5.25 Joints 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 74,000 131,000 72,089 137,000 47,809 461,000 8 02:40:32 $ $ 84,000 22,000 89,080 127,000 139,000 461,000 $ Print References Additional Information: 1. Cash includes a $37,000 restricted amount to be used for repayment of the bonds payable in 2025 2. The cost of the machinery is $224,000. 3. Accounts receivable includes a $37,000 notes receivable from a customer due in 2024. 4. The notes payable balance includes accrued interest of $22,000. 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 $52,000. 6.67,000 shares of no par common stock were issued in 2016. 100,000 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 sian.)

Answer 1

Assets
Current Assets:
Cash		$         37,000
Accounts receivable	$          94,000
Allowance for uncollectible accounts	$          22,000
Net accounts receivable		$         72,000
Inventory		$         72,000
Total current assets			$    1,81,000
Investments:
Restricted cash		$         37,000
Notes receivable		$         37,000
Total investments			$       74,000
Property, plant and equipment:
Machinery		$     2,24,000
Accumulated depreciation		$         87,000
Net property, plant and equipment			$    1,37,000
Intangible assets:
Franchise (net)			$       47,000
Total assets			$    4,39,000
Total liabilities and Shareholders' Equity
Current liabilities:
Accounts payable	$          84,000
Interest payable	$          22,000
Notes payable	$          67,000
Total current liabilities		$     1,73,000
Long-term liabilities:
Bonds payable		$     1,27,000
Total liabilities			$    3,00,000
Shareholders'equity:
Common stock		$         87,000
Retained earnings		$         52,000
Total stockholders' equity			$    1,39,000
Total liabilities and stockholders' equity			$    4,39,000