Betsey Jordan asked a local bank for a $50,000 loan to expand her small company. The bank asked Betsey to submit a financial statement of the business to supplement the loan application. Betsey prepared the following statement of financial position:

Required

1. The statement of financial position has several flaws. However, there is at least one major deficiency. Identify it and explain its significance.2. As a bank manager, would you lend the company money? Explain.

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Statement of Financial Position At June 30, 2017 Assets $ 9,000 Cash and investments Inventory Equipment Personal residence (monthly payments, $2,800) 30,000 46,000 300,000 20,000 Other assets $405,000 Total assets Liabilities $ 62,000 Short-term debt to suppliers Long-term debt on equipment 38,000 100,000 Total debt Shareholders' equity Total liabilities and shareholders' equity 305,000 $405,000