The following balance sheet for the Los Gatos Corporation was prepared by a rece
ID: 2336830 • Letter: T
Question
The following balance sheet for the Los Gatos Corporation was prepared by a recently hired accountant. In reviewing the s you notice several errors. LOS GATOS CORPORATION Balance Sheet At December 31, 2018 Assets Cash Accounts receivable Inventories Machinery (net) Franchise (net) $ 66,000 119,000 68,000 133, 000 43,000 $429,000 Total assets Liabilities and Shareholders' Equity Accounts payable Allowance for uncollectible accounts Note payable Bonds payable Shareholders' equity $ 76,000 18,000 81,000 123,000 131,000 $429,000 Total 1iabilities and shareholders' equity Additional Information: 1. Cash includes a $33,000 restricted amount to be used for repayment of the bonds payable in 2022 2. The cost of the machinery 1s $216,000. 3. Accounts recelvable Includes a $33,000 note recelvable from a customer due in 2021. 4. The note payable includes accrued interest of $18,000. 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 $48.000. 6. 63,000 shares of no par common stock were Issued in 2013. 100.000 shares are authorized.Explanation / Answer
Answer:
LOS GATOS CORPORATION
Balance Sheet
At December 31, 2018
Assets
Current assets:
Cash (66000-33000)
$33,000
Accounts receivable, net of allowance for
68,000
Inventories
68,000
Total current assets
169,000
Investments:
Bond sinking fund
$33,000
Note receivable
33,000
Total investments
66,000
Property, plant, and equipment:
Machinery
216,000
Less: Accumulated depreciation
-83,000
Net property, plant, and equipment
133,000
Intangibles:
Franchise
43,000
Total assets
$411,000
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable
$76,000
Interest payable
18,000
Note payable
63,000
Total current liabilities
157,000
Long-term liabilities:
Bonds payable
123,000
Shareholders’ equity:
Common stock, no par value; 100,000 shares
$83,000
Retained earnings
48,000
Total shareholders’ equity
131,000
Total liabilities and shareholders’ equity
$411,000
LOS GATOS CORPORATION
Balance Sheet
At December 31, 2018
Assets
Current assets:
Cash (66000-33000)
$33,000
Accounts receivable, net of allowance for
68,000
Inventories
68,000
Total current assets
169,000
Investments:
Bond sinking fund
$33,000
Note receivable
33,000
Total investments
66,000
Property, plant, and equipment:
Machinery
216,000
Less: Accumulated depreciation
-83,000
Net property, plant, and equipment
133,000
Intangibles:
Franchise
43,000
Total assets
$411,000
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable
$76,000
Interest payable
18,000
Note payable
63,000
Total current liabilities
157,000
Long-term liabilities:
Bonds payable
123,000
Shareholders’ equity:
Common stock, no par value; 100,000 shares
$83,000
Retained earnings
48,000
Total shareholders’ equity
131,000
Total liabilities and shareholders’ equity
$411,000
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