Personal Financial Statements Albert Jackson has applied for a personal loan. Cleveland State Bank has re-quested personal financial statements for Mr. Jackson, including a statement of financial condition and a statement of changes in net worth. The following is a listing of personal assets and liabilities:
1. A house was purchased for $150,000 in 1995. An 80 percent mortgage was taken out at the time of purchase and has been paid down to $90,000; however, interest rates have increased and the present value of the liability is estimated to be $80,000. The market value of the house is estimated in the range of $240,000 to $250,000. Brokerage commissions would be 6 percent if the house is sold through a broker.
2. A car was purchased last month for $18,500.
. Cash and short-term certificates of deposit total $45,000.
4. A total of $140,000 is invested in stocks and $40,000 in bonds. The current market value of the stocks is $190,000, and the market value of the bonds is $34,000.

5. Mr. Jackson borrowed $39,000 to buy some of his stock, and one-third of it has been paid off.
6. Artworks costing $14,000 were purchased 15 years ago.
Mr. Jackson thinks they are now worth $45,000. Current catalog listings indicate a value of approximately $22,000.
7. Four years ago, 3 lots were purchased for $75,000. The current mortgage is $50,000. An appraiser recently estimated the value of the lots at $120,000. A similar lot recently was sold for $30,000.
Mr. Jackson’s income tax rate is 25 percent.

a. Prepare a statement of financial condition for Albert Jackson.

b. Mr. Jackson has requested a bank loan of $500,000 to purchase the net assets of Strong Moving and Storage Company. The company reports total assets of $300,000 and liabilities of $120,000. If you were the bank loan officer, would you approve the loan? Explain.