Problem 24-3 Bradburn Corporation was formed years ago through a public subscription of common stock. Daniel Brown, who owns 15% of the common stock, was one of the organizers of Bradburn and is its current president. The company has been successful, but it currently is experiencing a shortage of funds. On June 10, 2015, Daniel Brown approached the Topeka National Bank, asking for a 24-month extension on two $36,030 notes, which are due on June 30, 2015, and September 30, 2015. Another note of $6,340 is due on March 31, 2016, but he expects no difficulty in paying this note on its due date. Brown explained that Bradburn's cash flow problems are due primarily to the company's desire to finance a $309,700 plant expansion over the next 2 fiscal years through internally generated funds. The commercial loan officer of Topeka National Bank requested financial reports for the last 2 fiscal years. BRADBURN CORPORATION BALANCE SHEET MARCH 31 2015 2014 Cash Notes receivable Accounts receivable (net) Inventories (at cost) Plant & equipment (net of depreciation) $18,710 148,320 135,070 105,140 1,469,800 $1,877,040 $12,750 133,090 126,910 50,180 1,428,000 $1,750,930 Total assets Accounts payable Notes payable Accrued liabilities Common stock (130,000 shares, $10 par) Retained earnings $81,790 78,400 29,052 1,300,000 387,798 $1,877,040 $91,830 62,760 14,080 1,300,000 282,260 $1,750,930 Total liabilities and stockholders equity Cash dividends were paid at the rate of $1 per share in fiscal year 2014 and $2 per share in fiscal year 2015 BRADBURN CORPORATION INCOME STATEMENT FOR THE FISCAL YEARS ENDED MARCH 31 2015 2014 Sales revenue Cost of goods sold* Gross margin Operating expenses Income before income taxes $3,013,700 1,543,100 1,470,600 861,370 609,230 $2,702,800 1,438,300 1,264,500 790,400 474,100