LO 124 APPLY YOUR KNOWLEDGE Decision Cases Case 1. (Learning Objectives 1, 2, 4: Using financial statements to evaluate a loan request) Two businesses, Blue Skies Corp. and Open Road, Inc., have sought business loans from you. To decide whether to make the loans, you have requested their Balance Sheets. A1 B D Blue Skies Corp. Balance Sheet August 31, 20X7 1 -234567899 Assets Liabilities Cash $ 6,000 Accounts payable 4 Accounts receivable 11,000 Notes payable 5 Furniture 12,000 Total liabilities Land 7 Equipment 76,000 Owners' Equity 45,000 Owners' equity Total liabilities and 9 Total assets $ 150,000 owners' equity $ 40,000 90,000 130,000 20,000 $ 150,000 10 A1 B C D Open Road, Inc. Balance Sheet August 31, 20X7 -234567820 Assets Liabilities Cash $ 4 Accounts receivable 3,000 Accounts payable 12,000 Note payable 5 Merchandise inventory 12,500 Total liabilities 6 Building 37,500 Shareholders' Equity Shareholders' equity Total liabilities and Total assets 10 $ 65,000 shareholders' equity $ 5,000 10,000 15,000 50,000 $ 65,000 Requirement 1. Using only these Balance Sheets, to which entity would you be more comfortable lending money? Explain fully, citing specific items and amounts from the respective Balance Sheets. (Challenge)