Evaluating Operating Results Rita Janson has a significant ownership interest in three business enterprises.

Five years ago, she and a friend borrowed several hundred thousand dollars and built a large bowling alley in a new mega-shopping mall. The business is run as a partnership and was quite profitable the first several years. This past year, however, it operated at a loss. Rita also holds 70 percent of the common stock of a medium-size corporation that produces plastic drain tile, and has a successful local beverage distributorship that she runs as a sole proprietorship.

a. From the viewpoint of the bank loan officer who is concerned about receiving the next annual payment on the loan associated with the bowling alley, tell what claim the bank has against:

1. The assets of the bowling alley.

2. The assets of the drain tile company.

3. The assets of the beverage distributorship.

b. What other assets might the bank be able to claim if the loan associated with the bowling alley is not paid?

c. If you were preparing a listing of Rita Janson’s assets and liabilities, would it be appropriate to include her portion of each of the assets and liabilities of the bowling alley?

How would her ownership in the other two business entities be reported? In each case, explain how you reached your conclusion.