The following is the balance sheet of McDonald Company:

Required
Indicate your criticisms of the balance sheet and briefly explain the proper treatment of any item criticized.

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McDONALD COMPANY December 31, 2010 Assets Current assets Cash (including $10,000 restricted for $40,000 20,000 70,000 payment of note) Assets Marketable equity securities Accounts receivable, less allowance for doubtful accounts of $12,000 Inventory 60,000 Total current assets $190,000 Plant assets: $ 40,000 100,000 Land Buildings, net Equipment Less: Accumulated depreciation Patent Organizational costs $80,000 20,000 60,000 20,000 15,000 235,000 Other assets: Prepaid insurance Total assets 5,000 $430,000 Liabilities and Stockholders' Equity Current liabilities: Accounts payable Wages payable Notes payable, due July 1, 2012 Bonds payable, due December 2016 S 60,000 10,000 20,000 100,000 - $190,000 4,000 30,000 Total current liabilities Dividends payable Deferred tax liability, long term Stockholders equity: Common stock ($10 par, 10,000 shares authorized, 5,000 shares outstanding) $ 50,000 Retained eamings Total stockholders' equity Total liabilities and stockholders equity 206,000 $430,000