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 notes receivable account contains one note that is due in 2026. The balance of $53,000 includes $3,000 of accrued interest expected to be received in July 2025.
3. The notes payable account contains one note that is due in installments of $20,000 per year. All interest 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:
For each asset and liability, determine whether it is correctly classified. If it is not, select the correct classification.

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MARCUS CLOTHING CORPORATION Balance Sheet At December 31, 2024 Assets Current assets: Cash Accounts receivable (net) Notes receivable Inventory Investments Total current assets Other assets: Land Equipment (net) Prepaid expenses (for the next 12 months) Patent (net) Total other assets Total assets Current liabilities: $ 200,000 320,000 27,000 22,000 Liabilities and Shareholders' Equity Accounts payable Salaries payable Total current liabilities Long-term liabilities: Notes payable Bonds payable (due in 5 years) Interest payable Total long-term liabilities Shareholders' equity: Common stock Retained earnings Total shareholders' equity Total liabilities and shareholders' equity $ 100,000 300,000 20,000 500,000 68,000 $ 137,000 80,000 53,000 240,000 66,000 576,000 569,000 $1,145,000 $ 125,000 32,000 157,000 420,000 568,000 $1,145,000