Exercise 3-7 Balance sheet preparation; errors [LO3-2, 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, 2018 AssetS Cash Accounts receivable Inventories Machinery (net) Franchise (net) $ 70,000 125,000 70,000 135,000 45, 000 $445,000 Total assets Liabilities and Shareholders' Equity Accounts payable $ 80,000 Allowance for uncollectible accounts 20,000 85,000 125,000 135,000 $445,000 Note payable Bonds payable Shareholders' equity Total liabilities and shareholders' equity Additional information: 1. Cash includes a $35,000 restricted amount to be used for repayment of the bonds payable in 2022 2. The cost of the machinery is $220,000 3. Accounts receivable includes a $35,000 note receivable from a customer due in 2021 4. The note payable includes accrued interest of $20,000. Principal and interest are both due on February 1, 2019 5. The company began operations in 2013. Income less dividends since inception of the company totals $50,000 6. 65,000 shares of no par common stock were issued in 2013. 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 At December 31, 2018