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 $570,000 long-term loan from Gulfport State Bank, $135,000 of which will be used to bolster the Cash account and $435,000 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 0 568,000 1,015,000 26,000 $ 98,000 220,000 25,000 370,000 665,000 29,000 Total current assets Plant and equipment, net 1,707,000 1,686,200 1,309,000 1,400,000 Total assets $3,393,200 2,709,000 Liabilities and Stockholders Equity Liabilities Current liabilities Bonds payable, 12% $ 835,000 $500,000 600,000 600,000 Total liabilities 1,435,000 1,100,000 Stockholders' equity: Common stock, $15 par Retained earnings 900,000 1,058,200 900,000 709,000 1,609,000 $3,393,200 2,709,000 Total stockholders' equity 1,958,200 Total liabilities and equity Sabin Electronics Comparative Income Statement and Reconciliation This Year Last Year $5,350,000 $4,560,000 3,520,000 Cost of goods sold 3,945,000 Gross margin Selling and administrative expenses 1,405,000 667,000 1,040,000 562,000 Net operating income Interest expense 738,000 72,000 478,000 72,000 Net income before taxes Income taxes (30%) 666,000 199,800 406,000 121,800 Net income Common dividends 466,200 117,000 284,200 96,000 Net income retained Beginning retained earnings 349,200 709,000 188,200 520,800 Ending retained earnings $1,058,200$709,000 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 3/10, n/30. All sales are orn account