Assume that you recently accepted a position with the First Security Bank as an assistant loan officer. As one of your first duties, you have been assigned the responsibility of evaluating a loan request for $80,000 from DiamondJewelry.com, a small proprietorship. In support of the loan application, Marion Zastrow, owner, submitted a "Statement of Accounts" (trial balance) for the first year of operations ended December 31, 2008.

1. Explain to Marion Zastrow 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 Marion Zastrow, you discovered that the accounts had not been adjusted at December 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 Marion Zastrow in a few days, what other considerations or information would you require before making a decision on the loanrequest?

DiamondJewelry.com Statement of Accounts December 31, 2008 Cash . Billings Due from Others Supplis(chemicals, etc) Trucks . 2,050 15,070 7,470 26,370 8,090 Amounts Owed to Others 2,850 23,500 73,650 Service Revenue .. Utilities Expense.... Rent Expense 7,330 ....2,400 700 470 100,000 Other Expenses.. 100,000