Question

Paul Sabin organized Sabin Electronics 10 years ago to produce and sell several electronic devices on which he had secured patents. Although the company has been fairly profitable, it is now experiencing a severe cash shortage. For this reason, it is requesting a $530,000 long-term loan from Gulfport State Bank, $115,000 of which will be used to bolster the Cash account and $415,000 of which will be used to modernize equipment. The company's financial statements for the two most recent years follow: Sabin Electronics Comparative Balance Sheet This Year Last Year Assets Current assets: Cash Marketable securities Accounts receivable, net 516,000 980,000 22,000 S 82,000 180,000 21,000 330,000 625,000 25,000 Prepaid expenses Total current assets Plant and equipment, net 1,600,000 1,570,200 1,181,000 1,400,000 Total assets $3,170,200 2,581,000 Liabilities and Stockholders Equity Liabilities: Current liabilities Bonds payable, 12% S 815,000 750,000 460,000 750,000 Total liabilities 1,565,000 1,210,000 Stockholders' equity: Common stock, $15 par Retained earnings 780,000 825,200 780,000 591,000 1,371,000 $3,170,200 2,581,000 Total stockholders' equity 1,605,200 Total liabilities and equity

Answer 1

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