
Financial statements
Assume that you recently accepted a position with Five Star National Bank & Trust as an assistant loan officer. As one of your first duties, you have been assigned the responsibility of evaluating a loan request for $300,000 from West Gate Auto Co., a small proprietorship. In support of the loan application, Joan Whalen, owner, submitted a “Statement of Accounts” (
West Gate Auto Co. Statement of Accounts October 31,2019 | ||
Cash | 5,000 | |
Billings Due from Others | 40,000 | |
Supplies (chemicals, etc.) | 7,500 | |
Building | 222,300 | |
Equipment | 50,000 | |
Amounts Owed to Others | 31,000 | |
Investment in Business | 179,000 | |
Service Revenue | 215,000 | |
Wages Expense | 75.000 | |
Utilities Expense | 10,000 | |
Rent Expense | 8,000 | |
Insurance Expense | 6,000 | |
Other Expenses | 1,200 | |
425,000 | 425,000 |
1. Explain to Joan Whalen why a set of financial statements (income statement, statement of owner’s equity, and
2. In discussing the “Statement of Accounts” with Joan Whalen, you discovered that the accounts had not been adjusted at October 31. Analyze the “Statement of Accounts” and indicate possible
3. Assuming that an accurate set of financial statements will be submitted by Joan Whalen in a few days, what other considerations or information would you require before making a decision on the loan request?

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Chapter 4 Solutions
Accounting, Chapters 14-26
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