Ivanhoe Corporation was formed five years ago through an initial public offering (IPO) of common shares. Daniel Brown, who owns 15% of the common shares, was one of the organizers of Ivanhoe and is its current president. The company has been successful, but it is currently experiencing a shortage of funds. On June 10, 2020, Daniel Brown approached the Hibernia Bank, asking for a 24-month extension on two $36,200 notes, which are due on June 30, 2020, and September 30, 2020. Another note for $5,400 is due on March 31, 2021, but he expects no difficulty in paying this note on its due date. Brown explained that Ivanhoe's cash flow problems are due primarily to the company's desire to finance a $284,500 plant expansion spent evenly over the next two fiscal years through internally generated funds. The plant expansion will be used in operations following the completion of the construction in 2023. The commercial loan officer of Hibernia Bank requested financial reports for the past two fiscal years. These reports are reproduced below. IVANHOE CORPORATION Statement of Financial Position March 31 Assets Cash 2020 2019 $17,870 $11,800 Notes receivable 145,630 125,600 Accounts receivable (net) 130,510 132,200 Inventories (at cost) 105,480 48,600 Plant and equipment (net of depreciation) 1,411,700 1,336,000 Total assets $1,811,190 $1,654,200 Equity and Liabilities Share capital-common (128,000 shares issued) $1,280,000 $1,280,000 Retained earnings (note 1) 382,010 279,000 Accrued liabilities 8,890 5,830 Notes payable (current) 77,800 60,420 Accounts payable Total equity and liabilities 62,490 28,950 $1,811,190 $1,654,200 Note 1: Cash dividends were paid at the rate of $1 per share in fiscal year 2019 and $2 per share in fiscal year 2020. IVANHOE CORPORATION Income Statement For the Fiscal Years Ended March 31 2020 2019 Sales $2,978,800 $2,681,000 Cost of goods sold (note 2) 1,518,900 1,418,000 Gross margin $1,459,900 $1,263,000 Operating expenses 792,500 764,500 Income before income tax $667,400 $498,500 Income tax (30%) 200,220 149,550 Net income $467,180 $348,950