BETTANY INC. The owner of Bettany Inc., Mario Sloan, has come to you, a public accountant, for advice. "I am very worried about my business right now. The bank loan is at its maximum level, we have no cash, and my salary is backing up, unpaid. I don't know what has gone wrong, and what I can do about it. Please provide some advice!" Bettany Inc. manufactures and distributes small, specialized boating items that have a good reputation and a stable market among pleasure boaters and fishers. Bettany Inc. has been in business for ten years. Mario reports, "The company showed a profit again this year. I hired a new part-time manager during the year so I could spend less day-today time on operations. She has been building up our asset base. We sold some investments, but made no new ones. We replaced some inefficient machinery, and purchased a vehicle to save on rental expenses. "We sold old machinery that would not be able to meet the demand that our new manager is projecting. It had a cost of $9,600, and a net book value of $3,800. I think the amount I took out of the company was in line with that of previous years, although I have not paid myself in awhile. I can't afford that, I can tell you, but the company has no money to pay me. "Our cash has dropped and we now owe a lot on a demand bank loan. I have some financial information for the year ( Page 272 Exhibit 1). BETTANY INC. Statement of Financial Position For the years ended December 31 Select information from the statement of earnings: Net earnings Depreciation expense Rent expense 12,000 9,200 28,700 (2,200) 3,600 Loss on sale of machinery Gain on sale of investments Can you explain what is happening with our cash flows? What should I do to get out of this hole?" Required: Cespond to Mario's request