Everclean Janitorial Service was started 2 years ago by Lauren Baird. Because business

(1) Unbilled janitorial services performed were $3,900.

(2) Janitorial supplies on hand were $2,100.

(3) Prepaid insurance was a 3-year policy dated January 1, 2014.

(4) December expenses incurred but unpaid at December 31, $620.

(5) Interest on the bank loan was not recorded.

(6) The amounts for property, plant, and equipment presented in the balance sheet were reported net of accumulated depreciation (cost less accumulated depreciation). These amounts were

$4,000 for cleaning equipment and $5,000 for delivery trucks as of January 1, 2014. Depreciation for 2014 was $2,000 for cleaning equipment and $5,000 for delivery trucks.

Everclean Janitorial Service Balance Sheet December 31, 2014 Assets Liabilities and Stockholders’ Equity Current assets Current liabilities Cash $ 5,500 Notes payable $10,000 Accounts receivable 9,000 Accounts payable 1,500 J anitorial supplies 5,200 Total current liabilities 11,500 Prepaid insurance 4,800 Long-term liability Total current assets 24,500 Notes payable 15,000 Property, plant, and equipment Total liabilities 26,500 Cleaning equipment (net) 22,000 Stockholders’ equity Delivery trucks (net) 34,000 Common stock 30,000 Total property, plant, and equipment 56,000 Retained earnings _24,000 Totahneeats $80,500 Total liabilities and stockholders’ equity $80,500 Instructions With the class divided into groups, answer the following.

(a) Prepare a correct balance sheet.

(b) Were the terms of the bank loan met? Explain.