Presented below is the balance sheet of McDonald Company.

McDONALD COMPANY December 31, 2000 Assets Current assets:

Cash (including $10,000 restricted for payment of note) $40,000 Marketable equity securities 20,000 Accounts receivable, less allowance for doubtful accounts of $12,000 70,000 Inventory 60,000 Total current assets $190,000 Plant assets:

Land 40,000 Buildings, net 100,000 Equipment $80,000 Less: Accumulated depreciation 20,000 60,000 Patent 20,000 Organizational costs 15,000 235,000 Other assets:

Prepaid insurance 5,000 Total assets $430,000 Liabilities and Stockholders’ Equity Current liabilities:

Accounts payable $60,000 Wages payable 10,000 Notes payable, due July 1, 2003 20,000 Bonds payable, due December 2010 100,000 Total current liabilities $190,000 Dividends payable 4,000 Deferred tax liability, long term 30,000 Stockholders’ equity:

Common stock ($10 par, 10,000 shares authorized, 5,000 shares outstanding) 50,000 Retained earnings 156,000 Total stockholders’ equity 206,000 Total liabilities and stockholders’ equity $430,000 Required Indicate your criticisms of the balance sheet and briefly explain the proper treatment of any item criticized.