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 $ 50,000 Accounts receivable 95,000 Inventories 60,000 Machinery (net) 125,000 Franchise (net) 35,000 Total assets $ 365,000 Liabilities and Shareholders’ Equity Accounts payable $ 60,000 Allowance for uncollectible accounts 10,000 Note payable 65,000 Bonds payable 115,000 Shareholders’ equity 115,000 Total liabilities and shareholders’ equity $ 365,000 Additional information: Cash includes a $25,000 restricted amount to be used for repayment of the bonds payable in 2022. The cost of the machinery is $200,000. Accounts receivable includes a $25,000 note receivable from a customer due in 2021. The note payable includes accrued interest of $10,000. Principal and interest are both due on February 1, 2019. The company began operations in 2013. Income less dividends since inception of the company totals $40,000. 55,000 shares of no par common stock were issued in 2013. 200,000 shares are authorized. Required:

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

Assets:

Current Assets:

Cash                                             $ 25,000

Bond Sinking Fund                         25,000

Accounts receivable       70,000

Allowance for

 uncollectible accounts -10,000  60,000

Inventories                                     60,000

Total Current Assets                                   $170,000

Non-current Assets:

Machinery                200,000

less accumulated

 depreciation           -75,000    125,000

Franchise (net)                            35,000

Notes Receivable                       25,000

Total Non-current assets                          $185,000

Total assets                                              $355,000

Liabilities and Shareholders’ Equity

Current Liabilities:

Accounts payable           $ 60,000

Note payable                     55,000

Interest on Notes Payable 10,000          $125,000

Bonds payable                                            115,000

Shareholders’ equity:

Authorized 200,000 share

Issued at no par               75,000

Retained Earnings           40,000              115,000

Total liabilities & shareholders’ equity $355,000

Explanation:

a) Adjustments:

1. Cash Balance:

As per question      $50,000

Bonds Sinking Fund 25,000

Balance                   $25,000

2. Accounts Receivable:

As per question    $95,000

Notes Receivable   25,000

Balance                 $70,000

3. Notes Payable:

As per question $65,000

Accrued interest   10,000

Balance              $55,000

4. Retained Earnings = $40,000

5. The corrected and reclassified balance sheet shows the total current assets, liabilities, and the Retained Earnings.

c

explanation:

c because the item on a bank statement is also referred to as an account statement. in addition, it provides the beginning balance, ending balance, statement date, transaction date for each transaction, payee, customer name and address, statement period, the account holder's account number, and the bank's customer service number

answer; functional fixedness;