1. Evaluate several options (loan denial, application grant, application deferral) available to the lender to determine the best option for this decision.

2. As a director of this institution, will you lend money or not? And with a rationale for this decision?

Exhibit 2 STATEMENTS OF RETAINED EARNINGS (UNAUDITED) (for years ending June 30 ) Exhibit 3 BALANCE SHEETS (UNAUDITED) (as at June 30) ASSETS Current assets: Cash Accounts receivable Inventory Prepaid expenses Income tax recoverable Other current assets Total current assets Fixed assets: Land Construction in progress Equipment, cost Furniture and fixtures, cost Forms and fittings, cost Less: accumulated amortization Net fixed assets Total fixed assets Other assets TOTAL ASSETS LIABILITIES Current liabilities: Accounts payable Notes payable Accrued expenses Taxes payable Current portion long-term debt Total current liabilities Long-term loan, Bank of Ontario 2 Total liabilities Shareholders" equity Common stock Retained earnings Total shareholders" equity TOTAL LIABILITIES \& EQUITY 1 Represents the value of work already completed on the new bulding. 2 Bank of Ontanio loan secured by equipment. fumiture & fixtures and forms & fittings. 150 days was used because 85 per cent of yearly purchases were made from May to September. Exhibit 5 STATEMENT OF CASH FLOWS (UNAUDITED) (for years ending June 30) OPERATIONS Net income $(12,100)$942 Adjustments to cash basis: FINANCING ACTIVITIES Current portion long-term debt Long-tem loan, Bank of Ontario \begin{tabular}{lr} $2,778 & $15,210 \\ (17,990) & $3,994 \\ \hline \end{tabular} Net cash flow from financing activities $(15,212)$69,204 INVESTING ACTIVITIES Land Construction in progress Fixed assets Other assets $(49,070)(31,312)12,15028S(107,824)30 Net cash flow from investing activities S(68,204)S(107,794) Net cash flow Beginning cash $45,974$72,576$118,550$(42,590)$115,166$72,576 Source: company fles