The financial statements for Royale and Cavalier companies are summarized here: Balance Sheet Cash Accounts Receivable, Net Inventory Equipment, Net Other Assets Total Assets Current Liabilities Notes Payable (long-term) Common Stock (par $20) Additional Paid-In Capital Retained Earnings Total Liabilities and Stockholders' Equity Income Statement Sales Revenue. Cost of Goods Sold Other Expenses Net Income Other Data: Per share price at end of year Accounts Receivable, Net Selected Data from Previous Year Notes Payable (long-term) Total Stockholders' Equity Equipment, Net Inventory Royale Company Cavalier Company $ 19,000 49,000 $ 70,000 10,000 98,000 538,000 134,000 $ 838,000 $ 108,000 178,000 474,000 44,000 34,000 $ 838,000 $ 782,000 474,000 234,000 $ 74,000 $ 19.00 $41,000 178,000 538,000 89,000 552,000 13,000 148,000 40,000 $281,000 $ 17,000 43,000 204,000 7,000 10,000 $281,000 $262,000 144,000 89,000 $ 29,000 $ 15.00 $ 8,000) 43,000 148,000 32,000 221,000 These two companies are in the same business and state but different cities. Each company has been in operation for about 10 years. Both companies received an unqualified audit opinion on the financial statements. Royale Company wants to borrow $69,000 cash and Cavalier Company is asking for $24,000. The loans will be for a two-year period. Both companies estimate bad debts based on an aging analysis, but Cavalier has estimated slightly higher uncollectible rates than Royale. Neither company issued stock in the current year. Assume the end-of-year total assets and net equipment balances approximate the year's average and all sales are on account.