The following items and their corresponding amounts appeared in the accounting records of the Office Equipment Specialists Company on December 31, 2000:

Accounts receivable $ 3,900 Accounts payable 2,900 Building (net) 24,000 Cash 1,400 Delivery equipment (net) 10,000 Inventory 7,500 J. Jenlon, capital 34,700 Mortgage payable (due 9/1/2002) 29,000 Marketable securities 2,000 Notes payable (due 10/1/2001) 10,000 Office supplies 2,300 Land 6,000 Notes receivable (due 12/31/2002) 7,000 Office equipment (net) 6,400 Prepaid insurance 1,700 Notes payable (due 12/31/2004) 11,000 Interest payable (due 10/1/2001) 1,000 Unearned revenue 3,000 Investment in government bonds (due 12/31/2009) 20,000 Salaries payable 600 Required: (1) Prepare a classified balance sheet for the Office Equipment Specialists Company on December 31, 2000.

(2) The Office Equipment Specialists: Company is applying for a short-term loan at a local bank. If you were the banker, would you grant the company a loan? Explain your decision using what you learned in this chapter about evaluating a company’s liquidity.