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 $580,000 long-term loan from Gulfport State Bank, 140,000 of which will be used to bolster the Cash account and $440,000 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 YearLast Year Assets Current assets: S 100,000 230,000 26,000 380,000 675,000 30,000 Accounts receivable, net 581,000 1,025,000 26,000 Prepaid expenses Total current assets 1,732,000 ,341,000 Piant and equipment, net Total assets Liabilities and Stockholders Equity 1,759,600 1,450,00 $3,491,600 2,791,000 Current liabilities Bonds payable, 12% $ 840,000 $ 510,000 650,000 650,000 Total liabilities 1,490,000 1,160,000 Stockholders equity Common stock, $20 par 770,000 1,231,600 770,000 Retained eamings Total stockholders equity Total liabilities and equity 861,000 2,001.600 1,631,000 $3,491,600 $2,791,000 Sabin Electronics Comparative Income Statement and Reconcliation This Year $5,400,000 $4,590,000 Sales Last Year Cost of goods sold 3.955,000 3,530,000 1,060,000 564.000 496,000 Gross margin Seling and administrative expenses 1.445,000 669,000 Net operaing income interest expense 776,000 78,000 8,000 Net income before taxes income taxes (30%) 698,000 418,000 125,400