Splish Corporation was formed 5 years ago through a public subscription of common stock Daniel Brown, who owns 15 of the common stock, was one of the organizers of Splish and is its current president The company has been successful, but it currently is experiencing a shortage of funds On June 10, 2021, Daniel Brown approached the Topeka National Bank, asking for a 24 month extension on two $34,980 notes, which are due on June 30, 2021, and September 30, 2021 Another note of $6,060 is due on March 31, 2022, but he expects no difficulty in paying this note on its due date Brown explained that Splishs cash flow problems are due primarily to the companys desire to finance a $298,500 plant expansion over the next 2 fiscal years through internally generated funds The commercial loan officer of Topeka National Bank requested the following financial reports for the last 2 fiscal years Splish Corporation Balance Sheet March 31 Assets 2021 2020 Cash $18,050 $12,590 Notes receivable 147,320 130,790 Accounts receivable (net) 132,920 125,940 Inventories (at cost) 105,990 49,780 Plant equipment (net of depreciation) 1,445,010 1,412,350 Total assets $1,849,290 $1,731,450 Liabilities and Owners Equity Accounts payable $78,710 $90,810 Notes payable 76,020 61,260 Accrued liabilities 4,360 1,880 Common stock (130,000 shares, $10 par) 1,301,250 1,293,620 Retained earnings a 388,950 283,880 Total liabilities and stockholders equity $1,849,290 $1,731,450 a Cash dividends were paid at the rate of $1 per share in fiscal year 2020 and $2 per share in fiscal year 2021 Splish Corporation Income Statement For the Fiscal Years Ended March 31 2021 2020 Sales revenue $3,000,740 $2,718,060 Cost of goods sold a 1,528,300 1,433,820 Gross margin 1,472,440 1,284,240 Operating expenses 868,470 779,910 Income before income taxes 603,970 504,330 Income taxes (40 ) 241,588 201,732 Net income $362,382 $302,598 a Depreciation charges on the plant and equipment of $99,500 and $102,710 for fiscal years ended March 31, 2020 and 2021, respectively, are included in cost of goods sold 2020 2021 1 Current ratio 2 07 1 2 54 1 2 Acid test (quick) ratio 1 3 Inventory tumover times 4 Return on assets 96 96

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Splish Corporation was formed 5 years ago through a public subscription of common stock. Daniel Brown, who owns 15% of the common stock, was one

Splish Corporation was formed 5 years ago through a public subscription of common stock. Daniel Brown, who owns 15% of the common stock, was one of the organizers of Splish and is its current president. The company has been successful, but it currently is experiencing a shortage of funds. On June 10, 2021, Daniel Brown approached the Topeka National Bank, asking for a 24-month extension on two $34,980 notes, which are due on June 30, 2021, and September 30, 2021. Another note of $6,060 is due on March 31, 2022, but he expects no difficulty in paying this note on its due date. Brown explained that Splishs cash flow problems are due primarily to the companys desire to finance a $298,500 plant expansion over the next 2 fiscal years through internally generated funds. The commercial loan officer of Topeka National Bank requested the following financial reports for the last 2 fiscal years.

Splish Corporation Balance Sheet March 31
Assets	2021	2020
Cash	$18,050	$12,590
Notes receivable	147,320	130,790
Accounts receivable (net)	132,920	125,940
Inventories (at cost)	105,990	49,780
Plant & equipment (net of depreciation)	1,445,010	1,412,350
Total assets	$1,849,290	$1,731,450

Liabilities and Owners Equity
Accounts payable	$78,710	$90,810
Notes payable	76,020	61,260
Accrued liabilities	4,360	1,880
Common stock (130,000 shares, $10 par)	1,301,250	1,293,620
Retained earnings^a	388,950	283,880
Total liabilities and stockholders equity	$1,849,290	$1,731,450

^aCash dividends were paid at the rate of $1 per share in fiscal year 2020 and $2 per share in fiscal year 2021.

Splish Corporation Income Statement For the Fiscal Years Ended March 31
	2021	2020
Sales revenue	$3,000,740	$2,718,060
Cost of goods sold^a	1,528,300	1,433,820
Gross margin	1,472,440	1,284,240
Operating expenses	868,470	779,910
Income before income taxes	603,970	504,330
Income taxes (40%)	241,588	201,732
Net income	$362,382	$302,598

^aDepreciation charges on the plant and equipment of $99,500 and $102,710 for fiscal years ended March 31, 2020 and 2021, respectively, are included in cost of goods sold.