Paul Sabin organized Sabin Electronics 10 years ago to produce and sel 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 $590,000 long-term loan from Gulfport State Bank, $145,000 of which will be used to bolster the Cash account and $445,000 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 Marketable securities Accounts receivable, net Inventory Prepaid expenses $ 104,000 $240,000 27,000 0 594,000 390,000 1,035,000 685,000 26,00031,000 1,759,000 1,373,000 1,751,000 1,420,000 Total current assets Plant and equipment, net $3,510,000 s2,793,000 Total assets Liabilities and Stockholders Equity Liabilities Current liabilities Bonds payable, 12% $ 845,000 $520,000 700,000 700,000 Total liabilities 1,545,000 1,220,000 Stockholders' equity: Common stock, $15 par Retained earnings 780,000 780,000 1,185,000 793,000 otal stockholders equity 1,965,000 1,573,000 Total liabilities and equity $3,510,000 s2,793,000