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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
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 | $ | 78,000 | |
Accounts receivable | 137,000 | ||
Inventory | 74,000 | ||
Machinery (net) | 139,000 | ||
Franchise (net) | 49,000 | ||
Total assets | $ | 477,000 | |
Liabilities and Shareholders Equity | |||
Accounts payable | $ | 88,000 | |
Allowance for uncollectible accounts | 24,000 | ||
Notes payable | 93,000 | ||
Bonds payable | 129,000 | ||
Shareholders equity | 143,000 | ||
Total liabilities and shareholders equity | $ | 477,000 | |
Additional Information:
- Cash includes a $39,000 restricted amount to be used for repayment of the bonds payable in 2025.
- The cost of the machinery is $228,000.
- Accounts receivable includes a $39,000 notes receivable from a customer due in 2024.
- The notes payable balance includes accrued interest of $24,000. Principal and interest are both due on February 1, 2022.
- The company began operations in 2016. Net income less dividends since inception of the company totals $54,000.
- 69,000 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.
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