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 $$620,000$ long$-$term loan from Gulfport State Bank, $$160,000$ of which will be used to bolster the Cash account and $$460,000$ of which will be used to modernize equipment. The company$$s financial statements for the two most recent years follow:

Sabin Electronics

Comparative Balance Sheet

This Year Last Year

Assets

Current assets:

Cash $ $118,000$ $ $270,000$

Marketable securities $030,000$

Accounts receivable, net $633,000420,000$

Inventory $1,065,000715,000$

Prepaid expenses $30,00034,000$

Total current assets $1,846,0001,469,000$

Plant and equipment, net $1,969,2001,490,000$

Total assets $ $3,815,200$ $ $2,959,000$

Liabilities and Stockholders' Equity

Liabilities:

Current liabilities $ $820,000$ $ $420,000$

Bonds payable, $12\%850,000850,000$

Total liabilities $1,670,0001,270,000$

Stockholders' equity:

Common stock, $ $15$ par $810,000810,000$

Retained earnings $1,335,200879,000$

Total stockholders$$ equity $2,145,2001,689,000$

Total liabilities and stockholders' equity $ $3,815,200$ $ $2,959,000$

Sabin Electronics

Comparative Income Statement and Reconciliation

This Year Last Year

Sales $ $5,600,000$ $ $4,710,000$

Cost of goods sold $3,995,0003,570,000$

Gross margin $1,605,0001,140,000$

Selling and administrative expenses $677,000572,000$

Net operating income $928,000568,000$

Interest expense $102,000102,000$

Net income before taxes $826,000466,000$

Income taxes $(30\%)247,800139,800$

Net income $578,200326,200$

Common dividends $122,000101,000$

Net income retained $456,200225,200$

Beginning retained earnings $879,000653,800$

Ending retained earnings $ $1,335,200$ $ $879,000$