indicate your criticisms of the balance sheet and briefly explain the proper treatme 638761

The following is the balance sheet of McDonald Company:

McDONALD COMPANY
December 31, 2010

Assets

     

Current assets:

     

Cash (including $10,000 restricted for payment of note)

$40,000

   

Assets

     

Marketable equity securities

 

20,000

 

Accounts receivable, less allowance for doubtful

 

70,000

 

Inventory

 

60,000

 

Total current assets

     

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, 2012

 

20,000

 

Bonds payable, due December 2016

 

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.