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 $540,000 long-term loan from Gulfport State Bank $120,000 of which will be used to bolster the Cash account and $420,000 of which will be used to modenize equipment. The company’s financial statements for the two most recent years follow: Sabin Electronics Comparative Balance Sheet This YearLast Year Assets Current assets: Cash Marketable securities Accounts receivable, net Inventory Prepaid expenses $ 86,000 190,000 22,000 340,000 635,000 26,000 529,000 960,000 22,000 Total current assets Plant and equipment, net ,597,0001,213,000 1,631,600 1,410,000 Total assets $3,228,600 2,623,000 Liabilities and Stockholders Equity Liabilities: Current liabilities Bonds payable, 12% $ 820,000 800,000 470,000 800,000 Total liabilities 1,620,000 1270.000 Stockholders’ equity: Common stock, $20 par Retained earnings 730,000 878,600 730,000 623,000 Total stockholders’ equity 1,608,600 1,353,000 Total liabilities and equity $3.228,600 2.623,000 Sabin Electronics Comparative Income Statement and Reconciliation This Year Last Year $5,200,000 $4,470,000 Sales F3 FS 2
