6 The following is the balance sheet of McDonald Company:

McDONALD COMPANY December 31, 2012 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, 2014 20,000 Bonds payable, due December 2018 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.