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 $530,000 long-term loan from Gulfport State Bank, $115,000 of which will be used to bolster the Cash account and $415,000 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 Current assets: $ 82000 180,000 21,000 330,000 625,000 25,000 16.000 980.000 Accounts receivable, net Prepaid expenses Total current assets Plant and equipment, net 1,600.000 1,570 200 1,181,000 Total assets $3.170.200 2.581,000 Liabilities and Stockholders Equity Liablities Current liablities Bonds payable, 12% S 815.000 460,000 750,000 Total liablities 1,565.000 Stockholders' equity Common stock, $15 par Retained eamings 720,000 885.200 651,000 1.371,000 $3,170.200 2.581,000 Total stockholders equity 1,605.200 Total liablities and equity Sabin Electronics Comparative Income Statement and Reconciliation This Year $5.150.000 4.440,000 Last Year Sales Cost of goods sold Gross margin Seling and administrative expenses 1,245.000 659.000 960,000 554.000 Net operating income Interest expense 586.000 90000 406,000 316,000 4,800 496.000 Net income before taxes Income taxes (30%) Net income Common dividends 347 200 113.000 221,200 92,000 Net income retained Beginning retained earnings 234.200 651,000 521,800 Ending retained eamings $ 885.200 651,000