The following balance sheet for the Los Gatos Corporation was prepared by a recently hired accountant. In

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.

LOS GATOS CORPORATION

Balance Sheet

At December 31, 2018

Assets

Cash ..................................................................... $ 40,000

Accounts receivable ...................................................80,000

Inventories ..............................................................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

Note payable ...........................................................55,000

Bonds payable ......................................................... 110,000

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 2022.

2. The cost of the machinery is $190,000.

3. Accounts receivable includes a $20,000 note receivable from a customer due in 2021.

4. The note payable includes accrued interest of $5,000. 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 $35,000.

6. 50,000 shares of no par common stock were issued in 2013. 100,000 shares are authorized.

Required:

Prepare a corrected, classified balance sheet.

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