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: S 82,000 180,000 21,000 330,000 625,000 25,000 Marketable securities Accounts receivable, net 516,000 980,000 22,000 Prepaid expenses Total current assets Plant and equipment, net 1,600,000 1,570,200 1,181,000 1,400,000 Total assets $3,170,200 2,581,000 Liabilities and Stockholders Equity Liabiities Current liabilides Bonds payable, 12% $ 815,000 750,000 460,000 750,000 Total liabliies 1,565.000 1.210,000 Stockholders equity Common stock, $15 par Retained eamings 720,000 885,200 720,000 651,000 1,371,000 $3,170,200 2,581,000 Total stockholders equity 1,605,200 Total liabilidies and equity Sabin Electronics Comparative Income Statement and Reconciliation This Year Last Year Sales Cost of goods sold $5.150,000 4.440,000 3,905,000 3,480,000 1.245,000 659,000 960,000 554,000 Gross margin Selling and administrative xpenses 586,000 90,000 406,000 90,000 Net operating income Interest expense Net income before taxes herne taxes (30%) 496,000 148,800 16,000 94,800 347,200 13,000 221,200 92,000 Net income Common dividends Net income retained Beginning retained eamings Ending retained earnings 234,200 651,000 129,200 21,800 $ 885,200 651,000