Whitegloves Janitorial Service was started 2 years ago by Jenna Olson. Because business has been exceptionally good, Jenna decided on July 1, 2020, to expand operations by acquiring an additional truck and hiring two more assistants. To finance the expansion, Jenna obtained on July 1, 2020, a £25,000, 10% bank loan, payable £10,000 on July 1, 2021, and the balance on July 1, 2022. The terms of the loan require the borrower to have £10,000 more current assets than current liabilities at December 31, 2020. If these terms are not met, the bank loan will be refinanced at 15% interest. At December 31, 2020, the accountant for Whitegloves Janitorial Service prepared the following statement of financial position.

Jenna presented the statement of financial position to the bank’s loan officer on January 2, 2021, confident that the company had met the terms of the loan. The loan officer was not impressed. She said, “We need financial statements audited by a CA.” A CA was hired and immediately realized that the statement of financial position had been prepared from a trial balance and not from an adjusted trial balance. The adjustment data at the statement of financial position date consisted of the following.
1. Unbilled janitorial services performed were £3,700.
2. Janitorial supplies on hand were £2,500.
3. Prepaid insurance was a 3-year policy dated January 1, 2020.
4. December expenses incurred but unpaid at December 31, £500.
5. Interest on the bank loan was not recorded.
6. The amounts for property, plant, and equipment presented in the statement of financial position were reported net of accumulated depreciation (cost less accumulated depreciation). These amounts were £4,000 for cleaning equipment and £5,000 for delivery trucks as of January 1, 2020. Depreciation for 2020, still unrecorded, was £2,000 for cleaning equipment and £5,000 for delivery trucks.

Instructions
With the class divided into groups, answer the following.
a. Prepare a correct statement of financial position.
b. Were the terms of the bank loan met? Explain.

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Whitegloves Janitorial Service Statement of Financial Position December 31, 2020 Owner's Equity and Liabilities Assets Owner's equity Property, plant, and equipment Equipment (net) Delivery trucks (net) Total property, plant, and equipment Current assets Prepaid insurance Supplies Accounts receivable Owner's capital Non-current liabilities Notes payable Current liabilities Notes payable £54,000 £22,000 34,000 56,000 15,000 £10,000 1,500 4,800 Accounts payable 11,500 £80,500 5,200 9,000 Total owner's equity and liabilities Cash 5,500 Total assets £80,500