You are required to answer the following questions based on the information provided above:

a. assuming that you are a banker and that the owner of each business has applied for a short- term loan of $6000 (repayable in six months), which application would you select as being the more favourable? Explain.

b. assuming that you are a businessperson interested in buying one or both companies, and both owners have indicated their intentions to sell, for which business would you be willing to pay the higher price, assuming you will be taking over the existing liabilities of the company? explain.

c.

if the existing owners agreed to be accountable for all existing liabilities, how would this change

your decision in (b), if at all?

ABC Company Balance sheet As at 30 June 2020 Assets Current assets Cash at bank Accounts receivable Total current assets Noncurrent Assets Office equipment ana building Total non-current assets Total assets liabilities Current liabilities Accounts payable Loan payable due 30 September 2020 Total current liabilities Total liabilities Net assets Owner's equity P. Cable Capital Total owners' equity 2 400 4 800 7 200 6 000 18 000 30 000 54 000 61 200 21 600 31 200 52 800 52 800 8 400 8 400 8 400 XYZ Company Balance sheet As at 30 June 2020 Assets Current assets Cash at bank 2 000 HC1010 Accounting for Business Page 4 of7 Accounts receivable Total current assets Noncurrent Assets Office equipment land building Total non-current assets Total assets liabilities Current liabilities Accounts payable Loan payable due 30 September 2020 Total current liabilities 24 000 26 000 600 13 600 6 000 20 200 46 200 4 800 7 200 12 000 Total liabilities 12 000 34 200 Net assets Owner's equity P. Cable Capital Total owners' equity 34 200 34 200