Exercise 3-7 (Static) 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, 2021 Assets Cash $ 40,000 Accounts receivable 80,000 Inventory 55,000 Machinery (net) 120,000 Franchise (net) 30,000 Total assets $325,000 Liabilities and Shareholders Equity Accounts payable 550,000 Allowance for uncollectible accounts 5,000 Notes payable 55,000 Bonds payable 110,000 Shareholders' equity 105,000 Total liabilities and shareholders! equity $325,000 Additional information 1 Cash includes a $20,000 restricted amount to be used for repayment of the bonds payable in 2025 2. The cost of the machinery is $190,000 3. Accounts receivable includes a $20,000 notes receivable from a customer due in 2024 4. The notes payable balance includes accrued interest of $5,000 Principal and interest are both due on February 1, 2022 5. The company began operations in 2016. Net Income less dividends since inception of the company totals $35,000 6.50,000 shares of no par common stock were issued in 2016 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. (Amounts to be deducted should be Indicated by a minus sign.) LOS GATOS CORPORATION Balance Sheet At December 31, 2021 Assets Current assets