prepare journal entries for exhibit 2 the full document can be find in the app by the tutor as average joe 'gym

  
 

Exhibit II-Additional Information Regarding the Loan The loan will be used to purchase $1 million in additional capital assets. The additional assets will result in an increase in revenue of 20%. The loan will bear interest at 6%. Principal payments of $200,000 per annum will be required. The company will withhold any dividend payments during the foreseeable future in order to support the debt to equity ratio. The capital assets are expected to have a useful life of 15 years with no residual value. All other fixed expenses are expected to remain consistent. The existing loan will require a principal payment of approximately $375,900 during the upcoming fiscal year. The payment for the following fiscal year is expected to be $300,000. Accounts receivable, inventory, prepaid expense, and accounts payable will all increase by 40% as a result of the increased sales. The marketable securities will be converted to cash at the beginning of the year.