The following balance sheet for the Los Gatos Corporation wa

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 $37,000 restricted amount to be used for repayment of the bonds payable in 2022.

The cost of the machinery is $224,000.

Accounts receivable includes a $37,000 note receivable from a customer due in 2021.

The note payable includes accrued interest of $22,000. 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 $52,000.

67,000 shares of no par common stock were issued in 2013. 100,000 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	$	74,000
Accounts receivable		131,000
Inventories		72,000
Machinery (net)		137,000
Franchise (net)		47,000
Total assets	$	461,000
Liabilities and Shareholders’ Equity
Accounts payable	$	84,000
Allowance for uncollectible accounts		22,000
Note payable		89,000
Bonds payable		127,000
Shareholders’ equity		139,000
Total liabilities and shareholders’ equity	$	461,000

Solution

Balance sheet Assets Current assets: Cash (Note:1) 37000 Accounts receivable,net of allowance for uncollectible accounts of $22000 72000 (Note:2) Inventories 72000 Total current assets 181000 Investments: Bond sinking Fund (Note:1) 37000 Notes receivable (Note:2) 37000 Total investments 74000 Property.Plant and Equipment: Machinery 224000 Less:Accumulated depreciation (224000-137000) 87000 Net Property,Plant and Equipment (Note:3) 137000 Intangible assets: Franchise 47000 Total assets 439000 Liabilities and stockholder\'s equity Current liabilities: Accounts payable 84000 Interest payable (Note:4) 22000 Note payable (Note:4) (89000-22000) 67000 Total current liabilities 173000 Long-term liabilities: Bonds payable 127000 Stockholder\'s equity: Common stock,no par value 100000 shares Authorized; 50000 shares issued and outstanding (139000-52000) 87000 Retained earnings (Note:5) 52000 Total stockholder\'s equity 139000 Total liabilities and stockholder\'s equity 439000 Notes: 1. Cash includes a restricted amount of $37000.It has to be reduced from the cash balance and create a Bond sinking fund ivestment for the same 2. Accounts receivable has to be presented in the balance sheet as a net figure by reducing the allowance for uncollectible accounts Account receivable also includes note receivable.It has to excluded from the accounts receivable and add to the notes receivable in the investment section 3. Machinery should be presented in the balance sheet as cost less accumulated depreciation 4. Notes payable balance includes accrued interest also.This has to be excluded from notes payable and to be added to interest payable account. Notes payable is due on Feb 1,2019.It means within two months.Hence,Notes payable should be classified as current liability. 5. Total shareholder\'s equity involves both Common stock and retained earnings.Income less dividend is retained earnings.Hence.Common stock=Shareholder\'s equity-Income less dividends