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YOU ARE A LOAN OFFICER FOR FIRST BENEVOLENT BANK. YOU HAVE AN UNEASY FEELING

YOU ARE A LOAN OFFICER FOR FIRST BENEVOLENT BANK. YOU HAVE AN UNEASY FEELING

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Author: Christine Farr
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DISCUSSION 5.1 You are a loan officer for First Benevolent Bank. You have an uneasy feeling as you examine a loan application from Daring Corporation. The application included the following financial statements.
DARING CORPORATION Income Statement For the Year Ended December 31, 2011
Sales revenue $100,000
Cost of goods sold (50,000)
Depreciation expense (5,000) 
Remaining expenses (25,000)
Net income $20,000
DARING CORPORATION Balance Sheet December 31, 2011
Cash $5,000
Accounts receivable 25,000
Inventory 20,000
Depreciable assets 55,000
Accumulated depreciation (5,000)
Total $100,000
Accounts payable $10,000
Interest payable 5,000
Note payable 45,000
Common stock 20,000
Retained earnings 20,000
Total $100,000


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