Paul Sabin organized Sabin Electronics 10 years ago in order 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 $500,000 long-term loan from Gulfport State Bank, $100,000 of which will be used to bolster the cash account and $400,000 of which will be used to modernize certain key items of equipment. The companys financial statements for the two most recent years follow:

During the past year, the company introduced several new product lines and raised the selling prices on a number of old product lines in order to improve its profit margin. The company also hired a new sales manager, who has expanded sales into several new territories. Sales terms are 2/10, n/30. All sales are on account. Assume that the following ratios are typical of firms in the electronics industry:

2. For both this year and last year:

(a) Present the balance sheet in common-size format. (Leave no cells blank - be certain to enter "0" wherever required. Round your answers to 1 decimal place.)

(b) Present the income statement in common-size format down through net income. (Input all values as positive values. Round your answers to 1 decimal place.)

SABIN ELECTRONICS Comparative Balance Sheet This Year Last Year $ $ 67,800 477,000 957,000 19, 200 1,521,000 1,160,000 $2,681,000 118,000 14,400 236,000 472,000 17,000 857,400 1,092,600 $1,950,000 Assets Current assets: Cash Marketable securities Accounts receivable, net Inventory Prepaid expenses Total current assets Plant and equipment, net Total assets Liabilities and shareholders' Equity Liabilities: Current liabilities Bonds payable, 12% Total liabilities Shareholders' equity: Preferred shares, no par ($6; 20,560 shares issued) Common shares, no par (unlimited authorized, 30,000 issued) Retained earnings Total shareholders' equity Total liabilities and shareholders' equity $ 796,000 400,000 1,196,000 566,000 400,000 966, 000 257,000 300,000 928,000 1,485,000 $2,681,000 257,000 300,000 427,000 984,000 $ 1,950,000 SABIN ELECTRONICS Comparative Income Statement This Year Sales $5,000,000 Less: Cost of goods sold 3,835,000 Gross margin 1,165,000 Less: Operating expenses 650,000 Net operating income 515,000 Less: Interest expense 48,000 Net income before taxes 467,000 Less: Income taxes (30%) 140, 100 Net income 326,900 Dividends paid: Preferred dividends 20,000 Common dividends 90,000 Total dividends paid 110,000 Net income retained 216,900 Retained earnings, beginning of year 623,600 Retained earnings, end of year $ 840, 500 Last Year $4,050,000 3,200,000 850,000 505,000 345,000 48,000 297,000 89, 100 207,900 20,000 69,500 89,500 118,400 505, 200 623,600 $ Current ratio Acid-test (quick) ratio Average age of receivables Inventory turnover in days Debt-to-equity ratio Times interest earned Return on total assets Price-earnings ratio 2.5 to 1 1.3 to 1 18 days 60 days 0.90 to 1 6.0 times 13% 12 Last Year % SABIN ELECTRONICS Common-Size Balance Sheets This Year Current assets: Cash % Marketable securities 0.0 Accounts receivable, net Inventory Prepaid expenses Total current assets Plant and equipment, net Total assets 0.0 % Current liabilities % Bonds payable, 12% Total liabilities 0.0 Shareholders' equity: Preferred shares, no par, $6 Common shares, no par Retained earnings Total shareholders' equity 0.0 Total liabilities and equity 0.0 % 0.0 % % 0.0 0.0 0.0 % Last Year % SABIN ELECTRONICS Common-Size Balance Sheets This Year Sales % Less cost of goods sold Gross margin Less operating expenses Net operating income Less interest expense Net income before taxes Less income taxes Net income % %