ACC 208A #3

Paul Sabin organized Sabin Electronics 10 years ago to produce and sell several electronic devices on which he had secured patents. Although the company has been fairly profitable, it is now experiencing a severe cash shortage. For this reason, it is requesting a $540,000 long-term loan from Gulfport State Bank, $120,000 of which will be used to bolster the Cash account and $420,000 of which will be used to modernize equipment. The company's financial statements for the two most recent years follow: Sabin Electronics Comparative Balance Sheet Assets Current assets: 190,000 Marketable securities 22.000 340,000 529.000 Accounts receivable, net 960,000 635,000 Prepaid expenses 22,000 26,000 Total current assets 1,597.000 1,213,000 Plant and equipment, net 1,410.000 1.631.600 Total assets $3,228,600 2,623,000 Liabilities and Stockholders Equity Liabilities 820,000 470,000 Current liabilities Bonds payable, 12% 800.000 800,000 Total liabilities 1,270,000 1,620,000 Stockholders' equity: 730,000 Common stock, $20 par 730,000 878,600 623,000 Retained earnings Total stockholders' equity 1,608,600 1,353,000 Total liabilities and equity $3,228,600 2,623,000