E 3-7 Balance sheet preparation; errors OL03-2, L03-3 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 $ 40,000 Accounts receivable 80,000 Inventory 55,000 Machinery (net) 120,000 Franchise (net) 30,000 Total assets $325,000 Liabilities and Shareholders' Equity Accounts payable $ 50,000 Allowance for uncollectible accounts 5.000 Notes payable 55,000 110,000 Bonds payable Shareholders equity 105,000 Total liabilities and shareholders' equity $325,000 Additional Information: 1. Cash includes a $20,000 restricted amount to be used for repayment of the bonds payable in 2025. 2. The cost of the machinery is $ 190,000. 3. Accounts receivable includes a $20,000 note receivable from a customer due in 2024. 4. The notes payable balance includes accrued interest of $5,000. 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 $35,000. 6. 50,000 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