Required:
Prepare a corrected, classified balance sheet. (Amounts to be deducted should be indicated by a minus sign.)
Answer:
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.
