The following balance sheet for Los Gatos Corporation was prepared by a recently hired accountant.Reviewing the statement,
Question:
The following balance sheet for Los Gatos Corporation was prepared by a recently hired accountant. Reviewing the statement, he sees several errors.
LOS GATOS CORPORATION | |||
Balance sheet | |||
As of December 31, 2018 | |||
Assets | |||
Money | ps | 52,000 | |
accounts receivable | 98,000 | ||
inventories | 61,000 | ||
Machinery (net) | 126,000 | ||
Franchise (net) | 36,000 | ||
total assets | ps | 373,000 | |
Liabilities and Shareholders' Equity | |||
Accounts payable | ps | 62,000 | |
Reserve for bad debts | 11,000 | ||
Pay | 67,000 | ||
Obligations with the public | 116,000 | ||
Shareholders | 117,000 | ||
Total Liability and Net Worth | ps | 373,000 | |
Additional Information:
The cash includes a restricted amount of $26,000 to be used toward the payment of bonds due in 2022.
The cost of the machinery is $202,000.
Accounts receivable includes a $26,000 note receivable from a customer due 2021.
The note payable includes accrued interest of $11,000. Both principal and interest are due on February 1, 2019.
The company began operations in 2013. Income less dividends since the company's inception is $41,000.
In 2013, 56,000 common shares without par value were issued. 100,000 shares are authorized.
Required:
Prepare a classified and corrected balance sheet.
Intermediate Accounting
ISBN: 978-1260481952
10th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson, Wayne Thomas