A motel has the following balance sheets at the end of each of its most recent two years of operation.

The owner cannot understand why he has $64,000 of retained earnings and a net income of $16,800 after tax from Year 0008 but has no money in the bank. Give the owner any explanations you can using this information.LO1

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Assets 12-31-2007 12-31-2008 Cash $ 8,800 $ -0- Accounts receivable Inventory Land 17,200 30,600 2,100 5,500 20,000 20,000 Building 50,600 100,600 Accumulated depreciation, building Total Assets (30,000) 40,000) $68,700 $116,700 Liabilities & Stockholders' Equity Accounts payable $ 6,700 $ 12,800 Bank loan payable -0- 7,900 Long-term mortgage on building -0- 30,000 Common stock 2,000 2,000 Retained earnings 60,000 64,000 Total Liabilities & Stockholders' Equity $68,700 $116,700 The income statements provide the following information: