You have recently been hired by First National Bank as the assistant loan officer. Part of your work involves assessing which companies should be allowed to borrow money from the bank. The bank wants to lend money to all companies that will likely have the resources available at the time the loan obligation becomes due. During the current week, three companies have approached you about obtaining a two-year loan. For each of these companies, you ask to see their balance sheets over the previous six years. Your analyses of the companies' assets and liabilities are provided in the graphs below. Examine those graphs and answer the following questions: $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $0 Year 1 2 Company A Company A Company B Company C 3 4 5 Click here to open the graph(s) in a new tab. $100,000 $75,000 6 $120,000 $100,000 Liabilities $80,000 $60,000 $40,000 -Assets Required: 1. The reported amount of assets for Company A over the six-year period is: 2. The reported amount of liabilities for Company B over the six-year period is: 3. The difference between total assets and total liabilities is referred to as: 4. Which company's trends in assets and liabilities suggest the highest likelihood of bankruptcy in Year 7? 5. Calculate stockholders' equity for each company in Year 6. (Negative amounts should be indicated by a minus sign.) $20,000 $0 Year 1 2 Company B 3 → 4 5 $75,000 $50,000 6 -Liabilities -Assets $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $0 : Year 1 2 Company C 3 4 5 $100,000 $70,000 6 Assets --Liabilities
You have recently been hired by First National Bank as the assistant loan officer. Part of your work involves assessing which companies should be allowed to borrow money from the bank. The bank wants to lend money to all companies that will likely have the resources available at the time the loan obligation becomes due. During the current week, three companies have approached you about obtaining a two-year loan. For each of these companies, you ask to see their balance sheets over the previous six years. Your analyses of the companies' assets and liabilities are provided in the graphs below. Examine those graphs and answer the following questions: $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $0 Year 1 2 Company A Company A Company B Company C 3 4 5 Click here to open the graph(s) in a new tab. $100,000 $75,000 6 $120,000 $100,000 Liabilities $80,000 $60,000 $40,000 -Assets Required: 1. The reported amount of assets for Company A over the six-year period is: 2. The reported amount of liabilities for Company B over the six-year period is: 3. The difference between total assets and total liabilities is referred to as: 4. Which company's trends in assets and liabilities suggest the highest likelihood of bankruptcy in Year 7? 5. Calculate stockholders' equity for each company in Year 6. (Negative amounts should be indicated by a minus sign.) $20,000 $0 Year 1 2 Company B 3 → 4 5 $75,000 $50,000 6 -Liabilities -Assets $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $0 : Year 1 2 Company C 3 4 5 $100,000 $70,000 6 Assets --Liabilities
Chapter18: Accounting Periods And Methods
Section: Chapter Questions
Problem 46P: Blue Company, an architectural firm, has a bookkeeper who maintains a cash receipts and...
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Transcribed Image Text:You have recently been hired by First National Bank as the assistant loan officer. Part of your work involves assessing which
companies should be allowed to borrow money from the bank. The bank wants to lend money to all companies that will likely have the
resources available at the time the loan obligation becomes due. During the current week, three companies have approached you
about obtaining a two-year loan. For each of these companies, you ask to see their balance sheets over the previous six years. Your
analyses of the companies' assets and liabilities are provided in the graphs below. Examine those graphs and answer the following
questions:
$120,000
$100,000
$80,000
$60,000
$40,000
$20,000
$0
Year 1
2
Company A
3
4
5
$100,000
$75,000
6
Company B
$75,000
RP
-Liabilities
-Assets
$50,000
Click here to open the graph(s) in a new tab.
Required:
1. The reported amount of assets for Company A over the six-year period is:
2. The reported amount of liabilities for Company B over the six-year period is:
3. The difference between total assets and total liabilities is referred to as:
$120,000
--Assets
--Liabilities $80,000
4. Which company's trends in assets and liabilities suggest the highest likelihood of
bankruptcy in Year 7?
5. Calculate stockholders' equity for each company in Year 6.
(Negative amounts should be indicated by a minus sign.)
Company A
Company B
Company C
$100,000
$60,000
$40,000
$20,000
$0
Year 1
2
3
4
5
6
$120,000
$100,000
$80,000
$60,000
$40,000
$20,000
$0
Year 1
2
Company C
3
4
5
$100,000
$70,000
6
--Assets
-Liabilities
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