The following balance sheet for the Los Gatos Corporation was prepared by a rece

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.

Additional information:

Cash includes a $36,000 restricted amount to be used for repayment of the bonds payable in 2022.

The cost of the machinery is $222,000.

Accounts receivable includes a $36,000 note receivable from a customer due in 2021.

The note payable includes accrued interest of $21,000. Principal and interest are both due on February 1, 2019.

The company began operations in 2013. Income less dividends since inception of the company totals $51,000.

66,000 shares of no par common stock were issued in 2013. 200,000 shares are authorized.

Required:
Prepare a corrected, classified balance sheet. (Amounts to be deducted should be indicated by a minus sign.)

LOS GATOS CORPORATION Balance Sheet At December 31, 2018 Assets Cash $ 72,000 Accounts receivable 128,000 Inventories 71,000 Machinery (net) 136,000 Franchise (net) 46,000 Total assets $ 453,000 Liabilities and Shareholders’ Equity Accounts payable $ 82,000 Allowance for uncollectible accounts 21,000 Note payable 87,000 Bonds payable 126,000 Shareholders’ equity 137,000 Total liabilities and shareholders’ equity $ 453,000

Explanation / Answer

LOS GATOS CORPORATION Balance Sheet At December 31, 2018 Assets Curent Assets Cash (72000-36000) $36,000 Accounts Receivable (net) $71,000 (128000-36000-21000) Inventories $71,000 Total Current Assets $178,000 Investments Restricted Cash $36,000 Note Receivable $36,000 Total Investments $72,000 Property,Plant & Equipment Machinery $222,000 Less: Accumulated Depriciation ($222000-136000) $86,000 Net property, plant, and equipment $136,000 Intangible Assets Franchise (Net) $46,000 Total Assets $432,000 Liabilities and Shareholders' Equity Current liabilities Accounts payable $82,000 Interest payable $21,000 Note payable (87000-21000) $66,000 Total current liabilities $169,000 Long­term liabilities Bonds payable $126,000 Shareholders' equity Common stock (137000-51000) $86,000 Retained earnings $51,000 Total Shareholder's equity $137,000 Total Liabilities and Shareholders' Equity $432,000

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