package guessinggame;


import java.awt.FlowLayout;
import java.awt.Color;
import java.awt.event.ActionListener;
import java.awt.event.ActionEvent;
import javax.swing.JFrame;
import javax.swing.JButton;
import javax.swing.JLabel;
import javax.swing.JTextField;

//create class GuessingGame that extends to JFrame
public class GuessingGame extends JFrame {   

    public static void main(String args[])
    {
    //define variables
    private JLabel instruction1JLabel;
    private JLabel instruction2JLabel;
    private JLabel instruction3JLabel;
    private JLabel outputJLabel;
    private JTextField inputJTextField;
    private JButton playAgainJButton;

    private int myGuess = 0;
    private int previousDistance = 0;
    private int currentDistance = 0; 
    private int randomNumber = ((int)((Math.random() * 1000) + 1));

    //Constructor
    public GuessingGame()
    {
        super( "Guessing Game" );
        setLayout( new FlowLayout() );

        System.out.println(myGuess);
        System.out.println(currentDistance);
          System.out.println(previousDistance);
        System.out.println("random number is " + randomNumber); 

          JLabel instruction1JLabel = new JLabel( "I have a number between 1 and 1000." );
          add( instruction1JLabel );

          JLabel instruction2JLabel = new JLabel( "Can you guess my number?" );
          add ( instruction2JLabel);

          JLabel instruction3JLabel = new JLabel( "Please enter your first guess\n");
          add( instruction3JLabel );

          inputJTextField = new JTextField( 12 );
          add( inputJTextField );

    outputJLabel = new JLabel( "    " );
          add( outputJLabel );

          JButton playAgainJButton = new JButton( "Play Again" );
          add ( playAgainJButton );

          InputTextFieldHandler inputTextFieldHandler = new InputTextFieldHandler();
          inputJTextField.addActionListener( inputTextFieldHandler );

          PlayAgainButtonHandler playAgainButtonHandler = new PlayAgainButtonHandler();
          playAgainJButton.addActionListener( playAgainButtonHandler );



   } 

   // inner class for input event handling
   private class InputTextFieldHandler implements ActionListener 
   {
      // handle input event
      public void actionPerformed( ActionEvent event )
      {
        myGuess = Integer.parseInt(inputJTextField.getText());
        currentDistance = Math.abs(myGuess - randomNumber);
          previousDistance = currentDistance;

        inputJTextField.setBackground( Color.WHITE );
         outputJLabel.setText( "    " );
         inputJTextField.setText( "" );
         inputJTextField.setEditable( false );
         inputJTextField.requestFocus();


          if ( previousDistance != 0 )
        {
              if ( currentDistance == previousDistance )
                  inputJTextField.setBackground( Color.WHITE );

              else if ( currentDistance < previousDistance )
                  inputJTextField.setBackground( Color.RED );

              else 
                  inputJTextField.setBackground( Color.BLUE );
          }

          if ( myGuess == randomNumber )
          {
                outputJLabel.setText( "Correct!" );
                  inputJTextField.setBackground( Color.BLUE );
                  inputJTextField.setEditable( true );
          }     
          else if ( myGuess < randomNumber )
              outputJLabel.setText( "Too Low" );
        else  
        outputJLabel.setText( "Too High" );

          inputJTextField.selectAll();  


      } // end method actionPerformed
   } // end private inner class InputTextFieldHandler

// inner class for playagainbutton event handling
 private class PlayAgainButtonHandler implements ActionListener 
   {
      // handle button event
      public void actionPerformed( ActionEvent event )
      {
        myGuess = 0;
        previousDistance = 0;
        currentDistance = (myGuess - randomNumber);


         inputJTextField.setBackground( Color.WHITE );
         outputJLabel.setText( "    " );
         inputJTextField.setText( "" );
         inputJTextField.setEditable( true );
         inputJTextField.requestFocus();

      } //end method actionPerformed
   } // end private inner class PlayAgainButtonHandler

 }// end class TextFieldFrame


import javax.swing.JFrame;

public class GuessingGameTest
{
    public static void main(String args[])
    {
        GuessingGame guessingGame = new GuessingGame();

        guessingGame.setDefaultCloseOperation(JFrame.EXIT_ON_CLOSE);
        guessingGame.setSize(250, 200);
        guessingGame.setVisible(true);
    }
}

I'm pretty sure it has to do with the location of the
public static void main(String args[])

You didn't say what your qestion/problem was.
But if that's one file... every public class must be in its own .java file, and the name of that file must be the name of the class. You therefore cannot have two public classes in one file.

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