The balance sheet for the Long Drive Golf Company on September 30, 2010 is presented below:

Long Drive Golf Company Balance Sheet

September 30, 2010

Cash	$528,000		Accounts payable	$1,568,000
Accounts receivable	1,216,000		Notes payable	752,000
Inventory	2,400,000		Total current liabilities	2,320,000
Fixed assets	5,632,000		Long-term debt	2,336,000
			Common stock	3,200,000
Total assets	$9,776,000		Retained earnings	1,920,000
			Total liabilities and stockholders' equity	$9,776,000

The treasurer of the firm wants to issue $1,200,000 in long-term bonds to be used as follows:

1. $240,000 to reduce accounts payable

2. $192,000 to retire notes payable

3. $128,000 to increase cash on hand

4. $640,000 to increase inventories

a) Assuming that the loan is obtained, construct a pro forma balance sheet for December 31, 2010, for Long Drive Golf Company that reflects the use of the funds provided.

b) Was the liquidity of Long Drive Golf Company improved by the loan?