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.
