Question & Answer: Please make sure to answer all the requirements……

Please make sure to answer all the requirements.
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, 2016 Assets Cash Accounts receivable Inventories Machinery (net) Franchise (net) $ 46,000 89,000 58,000 123,000 33,000 Total assets $349,000 Liabilities and Shareholders Equity Accounts payable Allowance for uncollectible accounts Note payable Bonds payable Shareholders equity S 56,000 8,000 61,000 113,000 111,000 otal liabilities and shareholders equity $349,000 Additional information: 1. Cash includes a $23,000 restricted amount to be used for repayment of the bonds payable in 20 2 The cost of the machinery is $196,000 3. Accounts receivable includes a $23,000 note receivable from a customer due in 2019 4. The note payable includes accrued interest of $8,000. Principal and interest are both due on February 1, 2017 5. The company began operations in 2011. Income less dividends since inception of the company totals $38,000 6. 53,000 shares of no par common stock were issued in 2011. 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
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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 GATOS CORPORATION Balance Sheet At December 31, 2016 Assets Cash Accounts receivable Inventories Machinery (net) Franchise (net) $ 46,000 89,000 58,000 123,000 33,000 Total assets $349,000 Liabilities and Shareholders Equity Accounts payable Allowance for uncollectible accounts Note payable Bonds payable Shareholders equity S 56,000 8,000 61,000 113,000 111,000 otal liabilities and shareholders equity $349,000 Additional information: 1. Cash includes a $23,000 restricted amount to be used for repayment of the bonds payable in 20 2 The cost of the machinery is $196,000 3. Accounts receivable includes a $23,000 note receivable from a customer due in 2019 4. The note payable includes accrued interest of $8,000. Principal and interest are both due on February 1, 2017 5. The company began operations in 2011. Income less dividends since inception of the company totals $38,000 6. 53,000 shares of no par common stock were issued in 2011. 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

Expert Answer

 

LOS GATOS CORPORATION
Balance Sheet
As at December , 3016
Assets
Current assets:
Cash 46000
Less: Restricted cash                                    (Note 1) -23000 23000
Inventory 58000
Accounts receivable 89000
Less: Receivable in 2019                             (Note 2) -23000
66000
Less: allowance for uncollectible accounts -8000 58000
Total Current assets 139000
Machinery , at cost 196000
Less: Accumulated depreciation                (Note 3) -73000 123000
Franchise(net) 33000
Cash avaibable for repayment of bonds payable in 2020     (Note 1) 23000
Accounts receivable due in 2019              (Note 2) 23000
Total Assets 341000
Liabilities and Shareholders’ equity
Current liabilities
Accounts payable 56000
Notes payable including interest due 61000
Total current liabilities 117000
Bonds payable 113000
Shareholders’ equity
Common stock 73000
(Authorised 100,000 shares of no par , out of which 53,000 issued
   and paid up)
Retained earnings 38000
Total shareholders’ equity 111000
Total liabilities & shareholders’ equity 341000
Notes:
1. Cash balance of $23,000 restricted to be used for repayment of bonds payable in 2020
     to be shown as a long term asset.
2. Accounts receivable of $23,000 due from customer in 2019 shall be shown as a long term asset.
3. Cost of the machinery (A)                               =196,000
     Net value of machinery   (B)                           =123,000
     Accumulated depreciation (A – B)               =73,000
4. Note payable should be presented as a current liability as it due to be paid in 2017.
5. Shareholders’ equity                                                                                         (A)       111,000
    Less: Income less dividends from inception (Retained earnings)   (B)        38,000
     Common stock                                                     (A – B)                                                  73,000

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