Moon Corporation and Star Corporation are in the same line of business and both were recently organized, so it may be assumed that the recorded costs for assets are close to current market values. The balance sheets for the two companies are as follows at July 31, current year.

Instructions
a. Assume that you are a banker and that each company has applied to you for a 90-day loan of $12,000. Which would you consider to be the more favorable prospect? Explain your answer fully.
b. Assume that you are an investor considering purchasing all the capital stock of one or both of the companies. For which business would you be willing to pay the higher price? Do you see any indication of a financial crisis that you might face shortly after buying either company? Explain your answer fully. (For either decision, additional information would be useful, but you are to reach your decision on the basis of the information available.)

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MOON CORPORATION BALANCE SHEET JULY 31, CURRENT YEAR Assets Llabllltles & Owners' Equity labilities: 21.600 Accounts Recelvable31,200 1,400 45,600 44,640 Notes Payable (due In 60 days) . . . . 14,880 11,520 $26,400 Office Equipment . . Total liabilities Stockholders' equity: Capital Stock Retalned Earnings 5144 480 Total.... 46,080 118,080 $144,480 STAR CORPORATION BALANCE SHEET JULY 31, CURRENT YEAR Assets Llabllltles & Owners' Equity Cash ..._... $5,760 Accounts Recelvable. ...11,520 14,400 72,600 Liabllities: Notes Payable Total lablitiles Stockholders' equity: Capltal Stock $86,400 Retalned Earnings . 53,760 140,160