E $3-7$

Balance sheet

preparation;

errors

LO$3-2,$ LO$3-3$

The following balance sheet for the Los Gatos Corporation was prepared by a recently bired accountant. In

reviewing the statement you notice several emors.

LOS GATOS CORPORATION

Balance Sheet

At December $31,2024$

Assets

Cash

Liabilities and Shareholders' Equity

Accounts payable

Allowance for uncollectible accounts

Notes payable

Bonds payable

Shareholders' equity

Total l$$abilities and shareholders' equity

$$50,000$

$5,000$

$55,000$

$110,000$

$105,000$

$$325,000$

Additional Information:

Cash includes a $$20,000$ restricted amount to be used for repayment of the bonds payable in $2028.$

The cost of the machinery is $$190,000.$

Accounts receivable includes a $$20,000$ note receivable from a customer due in $2027.$

The notes payable balance includes accrued interest of $$5,000.$ Principal and interest are both due on

February $1,2025.$

The company began operations in $2019.$ Net income less dividends since inception of the company totals

$$35,000.$

$50,000$ shares of no par common stock were issued in $2019.100,000$ shares are authorized.

Required:

Prepare a corrected, classified balance sheet. Use the additional information to help determine appropriate

classifications and account balances. The cost of machinery and its accumulated depreciation are shown

separately,