, pomotional, or both? Why? stical Thinking pacision-Making 5 White bon exceptional truck and Making Across the Organization as Janitorial Service was started 2 years ago by Lynn Sanders. Because business Sally good, Lynn decided on July 1, 2015 to expand creations by acquiring an ad- hiring two more assistants. To finance the expansion Lynn obtained on July 1, 2015, hank loan, payable $10,000 on July 1, 2016, and the balance on July 1, 2017. The terms the borrower to have $10,000 more current assets than current liabilities at Decem- Cahese terms are not met, the bank loan will be refinanced at 15% interest. At December untant for Whitegloves Janitorial Service Inc. prepared the following balance sheet. WHITEGLOVES JANITORIAL SERVICE Balance Sheet December 31, 2015 2000 on Jofrances.to 25.000, 10% bank lo the loan require the I.2013. If the 2015, the accountant Current assets Cash Accounts receivable Supplies Prepaid insurance Total current assets Property, plant, and equipment Equipment (net) Delivery trucks (net) Total property, plant, and equipment Assets Liabilities and Stockholders' Equity Current liabilities $ 6,500 Notes payable $10,000 9,000 Accounts payable 2,500 5,200 Total current liabilities $12,500 4,800 Long-term liability $25,500 Notes payable 15,000 Total liabilities 27,500 22,000 Stockholders' equity 34,000 Common stock 30,000 Retained earnings 24.000 56,000 Total stockholders' equity 54,000 Total assets $81,500 Total liabilities and stockholders' equity $81,500 Lynn presented the balance sheet to the bank's loan officer on January 2, 2016, confident that the company had met the terms of the loan. The loan officer was not impressed. She said, "We need financial statements audited by a CPA." A CPA was hired and immediately realized that the balance sheet had been prepared from a trial balance and not from an adjusted trial balance. The adjust- ment data at the balance sheet date consisted of the following. 1. Unbilled janitorial services performed were $3,700. 2. Janitorial supplies on hand were $2,500. 3. Prepaid insurance was a 3-year policy dated January 1, 2015. 4. December expenses incurred but unpaid at December 31, $500. 5. Interest on the bank loan was not recorded. The amounts for property, plant, and equipment presented in the balance sheet were reported net of accumulated depreciation (cost less accumulated depreciation). These amounts were $4,000 for cleaning equipment and $5,000 for delivery trucks as of January 1, 2015. Deprecia- tion for 2015 was $2,000 for cleaning equipment and $5,000 for delivery trucks. - Completing the Accounting Cycle Instructions With the class divided into groups, answer the following. (a) Prepare a correct balance sheet. (b) Were the terms of the bank loan met? Explain. Communication Activity BYP4-6 The accounting cycle is important in understandin Instructions Write a memo to your instructor that lists the steps of the acc be completed. End with a paragraph that explains the optio Ethics Case