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 corporationbalance sheetat december 31, 2018assets cash $ 72,000 accounts receivable 128,000 inventories 71,000 machinery (net) 136,000 franchise (net) 46,000 total assets $ 453,000 liabilities and shareholders’ equity accounts payable $ 82,000 allowance for uncollectible accounts 21,000 note payable 87,000 bonds payable 126,000 shareholders’ equity 137,000 total liabilities and shareholders’ equity $ 453,000 additional information: cash includes a $36,000 restricted amount to be used for repayment of the bonds payable in 2022.the cost of the machinery is $222,000.accounts receivable includes a $36,000 note receivable from a customer due in 2021.the note payable includes accrued interest of $21,000. 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 $51,000.66,000 shares of no par common stock were issued in 2013. 200,000 shares are authorized. required: prepare a corrected, classified balance sheet. (amounts to be deducted should be indicated by a minus sign.)

2018Balance Sheet

$36,000  Cash

$36,000  Cash Restricted  

$92,000  Accounts Receivable

-$21,000  Less Allowance for uncollectible accounts

$71,000  Inventory

$214,000  TOTAL CURRENT ASSETS  

$36,000  Accounts Receivable

$200,000Machinery

-$64,000Accum Depreciation

$46,000  Franchise

$218,000  TOTAL NONCURRENT ASSETS  

$432,000  TOTAL ASSETS  

$82,000   Accounts Payable  

$66,000   Notes Payable  

$21,000    Accrued Interest  

$169,000  TOTAL CURRENT LIABILITIES  

$126,000  Bond Payable  

$126,000  TOTAL NONCURRENT LIABILITIES  

$295,000  TOTAL LIABILITIES  

$51,000    Retained Earnings  

$86,000   Shareholders' Equity  

$137,000  TOTAL EQUITY  

$432,000  TOTAL EQUITY + LIABILITIES  

Explanation:

The account allowance for uncollectible accounts is reclassified from liabilities to assets because it's a contra-assets account that impact in the balance of accounts receivable.

The cash account was split between the cash available and the cash restricted

The cost of machinery let us find the total depreciation value up to date, Machinery net value $136,000 - $200,000 cost of machinery equals to depreciation of -$64,000.

The account receivable that due in 2021 it's reclassified as non current assets, because it's liquidity it's more than a year.

Accrued interest are deducted of Note Payable to be presented as an independent account.

The Note payable and the accrued interest are keeped in current liabilities because its due date is on 2019.

The Bond Payable account it's reclassified to long term liabilities because it's indicated that it due in 2022,  

Retained Earning account arise of the income less dividends paid since the inception of the company.

answer; the correct answer to the above statement is (true);