Exercise $3-7($Algo$)$ Balance sheet preparation; errors $[$LO$3-2,3-3]$

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 $31,2024$

Assets

Cash $ $80,000$

Accounts receivable $140,000$

Inventory $75,000$

Machinery $($net$)140,000$

Franchise $($net$)50,000$

Total assets $ $485,000$

Liabilities and Shareholders$$ Equity

Accounts payable $ $90,000$

Allowance for uncollectible accounts $25,000$

Notes payable $95,000$

Bonds payable $130,000$

Shareholders$$ equity $145,000$

Total liabilities and shareholders$$ equity $ $485,000$

Additional Information:

Cash includes a $$40,000$ restricted amount to be used for repayment of the bonds payable in $2028.$

The cost of the machinery is $$230,000.$

Accounts receivable includes a $$40,000$ notes receivable from a customer due in $2027.$

The notes payable balance includes accrued interest of $$25,000.$ 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 $$55,000.$

$70,000$ shares of no par common stock were issued in $2019.200,000$ 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.

Note: Amounts to be deducted should be indicated by a minus sign.Balance Sheet

At December $31,2024$

Assets

Current assets:

Net accounts receivable

Total current assets

Investments:

Property, plant, and equipment:

Net property, plant, and equipment

$0$

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