The following balance sheet for the Los Gatos Corporation was prepared by a rece

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, 2013 Assets Cash $ 43,000 Accounts receivable 77,000 Inventories 58,000 Machinery (net) 150,000 Franchise (net) 33,000 Total assets $ 361,000 Liabilities and Shareholders’ Equity Accounts payable $ 53,000 Allowance for uncollectible accounts 8,000 Note payable 61,000 Bonds payable 125,000 Shareholders’ equity 114,000 Total liabilities and shareholders’ equity $ 361,000 Additional information: 1. Cash includes a $14,000 bond sinking fund to be used for repayment of the bonds payable in 2017. 2. The cost of the machinery is $170,000. 3. Accounts receivable includes a $12,000 note receivable from a customer due in 2016. 4. The note payable includes accrued interest of $8,000. Principal and interest are both due on February 1, 2014. 5. The company began operations in 2008. Income less dividends since inception of the company totals $35,000. 6. 50,000 shares of no par common stock were issued in 2008. 100,000 shares are authorized. Required: Prepare a corrected, classified balance sheet.

Explanation / Answer

Ans-

LOS GATOS CORPORATION Balance Sheet AT DECEMBER 31, 2013 Assets Amount ($) Amount ($) Current Assets Cash           29,000 Accounts Receivable, net of allowance for uncollectible accounts of $8,000           57,000 Inventories           58,000 Total Current Assets 144,000 Investment Bond Sinking Fund           14,000 Note Receivable           12,000 Total Investment     26,000 Property,plant,and Equipment Machinery         170,000 Less-Accumulated Depriciation         (20,000) Net Property,plants and,equipment 150,000 Intangible Assets: Franchise     33,000 Total assets   353,000 Liabilities and Shareholders’ Equity Current Liabilities Accounts payable             53,000 Interest Payable             8,000 Note payable             53,000 Total Current Liablities 114,000 Long-term Liabilities Bonds payable   125,000 Shareholders’ equity   Common stock,no par value 100,000 shares authorized 50,000 shares issued and outstadings           79,000 Retained Earnings           35,000 Total Shareholders' Equity 114,000 Total Liabilities and Shareholders’ Equity 353,000                   1 Cash         (14,000) Bonds sinking Fund           14,000                   2 Machinery         170,000 Machinery net         150,000 Accumulated Depriciation           20,000                   3 Account Receivable         (12,000) Notes Receivable due in 2016           12,000                   4 Accured Interest             8,000 Note Payable due in Feb 2014           (8,000)                   5 Retained Earnings Income-Dividend           35,000                   6 Common Stock 50,000 shares 114000-35000           79,000

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