You recently joined the internal auditing department of Marcus Clothing Corporation. As one of your first assignments, you are examining a balance sheet prepared by a staff accountant.

In the course of your examination you uncover the following information pertaining to the balance sheet:
1. The company rents its facilities. The land that appears in the statement is being held for future sale.
2. The note receivable is due in 2020. The balance of $53,000 includes $3,000 of accrued interest. The next interest payment is due in July 2019.
3. The note payable is due in installments of $20,000 per year. Interest on both the notes and bonds is payable annually.
4. The company's investments consist of marketable equity securities of other corporations. Management does not intend to liquidate any investments in the coming year.
Required:
Identify and explain the deficiencies in the statement prepared by the company's accountant. Include in your answer items that require additional disclosure, either on the face of the statement or in a note.

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MARCUS CLOTHING CORPORATION Balance Sheet At December 31, 2018 Assets Current assets Cash Accounts receivable, net Note receivable Inventories Investments $137,000 80,000 53,000 240,000 66,000 576,000 Total current assets Other assets: Land Equipment, net Prepaid expenses (for the next 12 months) Patent 200,000 320,000 27,000 22,000 Total other assets 569,000 $1.145,000 Total assets Liablitles and Shareholders' Equity Current liabilities: Accounts payable Salaries payable $125,000 32,000 157,000 Total current liabilities Long-term llabllltles: Note payable Bonds payable (due in 5 years) Interest payable $100,000 300,000 20,000 Total long-term liabilities 420,000 Shareholders' equlty Common stock Retained earnings 500,000 68,000 Total shareholders' equity 568,000 $1,145,000 Total liabilities and shareholders' equity