Exercise 3-7 (Algo) Balance sheet preparation; errors [LO3-2, 3-3] The following balance sheet for the Los Gatos Corporation was prepared by a recently hired accountant. In reviewing the statement you notice several errors. Cash Accounts receivable Inventory Machinery (net) Franchise (net) Total assets Accounts payable LOS GATOS CORPORATION Balance Sheet At December 31, 2021 Assots $ 60,000 110,000 65,000 130,000 40,000 $ 405,000 $ 70,000 15,000 75,000 120,000 Liabilities and Shareholders' Equity Allowance for uncollectible accounts Notes payable Shareholders' equity Total liabilities and shareholders' equity $ 405,000 Bonds payable 125,000 Additional Information: 1. Cash includes a $30,000 restricted amount to be used for repayment of the bonds payable in 2025. 2. The cost of the machinery is $210,000. 3. Accounts receivable includes a $30,000 notes receivable from a customer due in 2024. 4. The notes payable balance includes accrued interest of $15,000. 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 $45,000. 6. 60,000 shares of no par common stock were issued in 2016. 200,000 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 sign.) Current assets: Net accounts receivable Total current assets Investments: Total investments Property, plant, and equipment: LOS GATOS CORPORATION Balance Sheet At December 31, 2021 Assets Net property, plant, and equipment Intangible assets: 0 0 0 Total assets $ 0 Liabilities and Shareholders' Equity Current liabilities: Net property, plant, and equipment Intangible assets: Total assets Current liabilities: Total current liabilities Long-term liabilities: Total liabilities Shareholders' equity: 0 $ 0 Liabilities and Shareholders' Equity Total shareholders' equity Total liabilities and shareholders' equity 0 $ 0