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 56,000 104,000 63,000 128,000 38.000 $ 389,000 $ 66,000 13,000 71,000 118,000 121.000 $ 389,000 Additional Information: 1. Cash includes a $28,000 restricted amount to be used for repayment of the bonds payable in 2025 2. The cost of the machinery is $206,000, 3. Accounts receivable includes a $28,000 notes receivable from a customer due in 2024 4. The notes payable balance includes accrued interest of $13,000. 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 $43,000. 6.58,000 shares of no par common stock were issued in 2016. 200,000 shares are authorized.

Answer 1

Answer:

LOS GATOS CORPORATION
Balance Sheet
At December 31, 2021
Assets	Amount ($)	Amount ($)
Current Assets :
Cash		28,000
Accounts Receivable (104,000 - 28,000)	76,000
Less: Allowance for Doubtful Accounts	-13,000
Net Accounts Receivable		63,000
Inventory		63,000
Total Current Assets		154,000
Investments:
Notes receivable (due in 2024)	28,000
Bonds Sinking Funds	28,000
Total Investments		56,000
Property,Plant and Equipment:
Machinery	206,000
Less: Accumulated Depreciation - Machinery	- 78,000
Net Property, Plant and Equipment		128,000
Intangible Assets:
Franchise		38,000
Total Assets		376,000
Liabilitīes and Stockholder's Equity	Amount ($)	Amount ($)
Current Liabilities:
Accounts Payable		66,000
Interest Payable		13,000
Notes Payable (71,000 - 13,000)		58,000
Total Current Liabilities		137,000
Long-Term Liabilities:
Bonds Payable		118,000
Total Liabilities		255,000
Stockholder's Equity
Commom Stock (No Par Value; 200,000 shares authorized, 58,000 shares issued)	78,000
Retained Earnings	43,000
Total Stockholder's Equity		121,000
Total Liabilities and Stockholder's Equity		376,000