Create an Account

Already have account?

Forgot Your Password ?

Home / Questions / Assume that you recently accepted a position with Frontier National Bank as an assistant l...

Assume that you recently accepted a position with Frontier National Bank as an assistant loan officer As one of your first duties you have been assigned the responsibility of evaluating a loan

Assume that you recently accepted a position with Frontier National Bank as an assistant loan officer. As one of your first duties, you have been assigned the responsibility of evaluating a loan request for $150,000 a small proprietorship. In support of the loan application, Tess Ramey, owner, submitted a “Statement of Accounts” (trial balance) for the first year of operations ended July 31, 2012.

Cash

5,000

 

Billings Due from Others

40,000

 

Supplies (chemicals, etc.)

7,500

 

Building

122,300

 

Equipment

25,000

 

Amounts Owed to Others

 

11,000

Investment in Business

 

74,000

Service Revenue

 

215,000

Wages Expense

75,000

 

Utilities Expense

10,000

 

Rent Expense

8,000

 

Insurance Expense

6,000

 

Other Expenses

1,200

 

 

300,000

300,000

1. Explain to Tess Ramey why a set of financial statements (income statement, 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 Tess Ramey, you discovered that the accounts had not been adjusted at July 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 Tess Ramey in a few days, what other considerations or information would you require before making a decision on the loan request?

May 14 2020 View more View Less

Answer (Solved)

question Subscribe To Get Solution

Related Questions