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 $ 40,000 80,000 55,000 120,000 Cash Accounts receivable Inventories Machinery (net) Franchise (net) 30,000 Total assets $325,000 Liabilities and Shareholders' Equity Accounts payable $ 50,000 Allowance for uncollectible accounts Note payable Bonds payable 5,000 55,000 110,000 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. (Amounts to be deducted should be indicated by a minus sign.)
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 $ 40,000 80,000 55,000 120,000 Cash Accounts receivable Inventories Machinery (net) Franchise (net) 30,000 Total assets $325,000 Liabilities and Shareholders' Equity Accounts payable $ 50,000 Allowance for uncollectible accounts Note payable Bonds payable 5,000 55,000 110,000 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. (Amounts to be deducted should be indicated by a minus sign.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text: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)
Franchise (net)
120,000
30,000
Total assets
$325,000
Liabilities and Shareholders' Equity
Accounts payable
$ 50,000
5,000
Allowance for uncollectible accounts
Note payable
Bonds payable
Shareholders' equity
55,000
110,000
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. (Amounts to be deducted should be indicated by a minus sign.)
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