Assume that you recently accepted a position with Stockman National Bank as an

Assume that you recently accepted a position with Stockman National Bank as an assis- tant loan officer. As one of your first duties, you have been assigned the responsibility of evaluating a loan request for $90,000 from Goldworks.com, a small proprietorship. In support of the loan application, Yolanda Tovar, owner, submitted a “Statement of Accounts” (trial balance) for the first year of operations ended March 31, 2010. Goldworks.com

Statement of Accounts March 31, 2010

 Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,100

 Billings Due from Others . . . . . . . . . . . . . . . . . . . 30,140

Supplies (chemicals, etc.) . . . . . . . . . . . . . . . . . . 14,940

Trucks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52,740

 Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,180

 Amounts Owed to Others . . . . . . . . . . . . . . . . . . 5,700

Investment in Business . . . . . . . . . . . . . . . . . . . . 47,000

 Service Revenue . . . . . . . . . . . . . . . . . . . . . . . . 147,300

Wages Expense . . . . . . . . . . . . . . . . . . . . . . . . . 60,100

 Utilities Expense . . . . . . . . . . . . . . . . . . . . . . . . 14,660

 Rent Expense . . . . . . . . . . . . . . . . . . . . . . . . . . 4,800

 Insurance Expense . . . . . . . . . . . . . . . . . . . . . . . 1,400

Other Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 940 _________ _________

200,000 200,000 _________ _________ _________ _________

1.Explain to Yolanda Tovar why a set of financial statements (income state- ment, statement of owner’s equity, and balance sheet) would be useful to you in evaluating the loan request.

2.In discussing the “Statement of Accounts” with Yolanda Tovar, you discovered that the accounts had not been adjusted at March 31. Analyze the “Statement of Accounts” and indicate possible adjusting entries that might be necessary before an accurate set of financial statements could be prepared.

3. Assuming that an accurate set of financial statements will be submitted by Yolanda Tovar in a few days, what other considerations or information would you require before making a decision on the loan request?