1. Raj Singh is a young man who has just inherited a business from his father. Raj has little business experience but is anxious to learn and willing to work hard. The business has not been operating very profitably lately because it badly needs to replace outdated equipment. This will cost $35,000 The latest balance sheet shows the following: BANNAGER'S CLEANERS Balance Sheet March 31, 2008 ASSETS LIABILITIES Bank $ 3,000.00 Accounts Payable Accounts Receivable Business Depot $ 5,000.00 Mercury Company 17,000.00 Bank loan 30,000.00 Land 30,000.00 Mortgage paayble 50,000.00 Builidng 50,000.00 Total Liabilities 85,000.00 Equpment 20,000.00 OWNER'S EQUITY V. Singh, Capital 35,000.00 TOTAL ASSETS $ 120,000.00 TOTAL LIABILITIES $ 120,000.00 & OWNER'S EQUITY After examining the balance sheet, Raj believes that he sees the solution to the problem. He wants to use the equity to purchase the new equipment. The accountant hastens to point out to Raj that this is not possible. Raj demands an explanation. What explanation will the accountant give? ( 2 marks)