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.