Required

Which customer's loan request should be accepted and why? What additional information be decision? Assume that the year$-$end account balances are representative in making a requirest whole year of the

Problem $12\mathrm{.}14$

Preparation of Statements from incomplete Information

The following information is available for Arogya Company:

AROGYA COMPANY Balance Sheet, August $31,20$X$1$

Assets

Property, plant and equipement

Non$-$current investments

Inventories

Trade receivables.

Cash and cash equivalents.

Other current assets.

Total assets

Equity and Liabilities

Equity

Equity share capital.

Other equity.

Liabilities

Non$-$current liabilities

Lorng$-$term borrowings..

Other long$-$term liabilities.

Current liabilities

Trade payables

Total equity and liabilities.

$2,400$

$1,500$

$600$

$28,000$

$7$

$21,000$

$17,$

Net sales.

Cost of goods sold.

Gross profit.

AROGYA COMPANY Statement of Profit and Losa For the year ended August $31,20$X$1$

Selling and administrative expenses.

Profit before interest and tax

Interest expense

$33,000$

$?$

$9,000$

Profit before tax.

Income tax

Profit after tax.

$3,500$

Additional information: $($a$)$ Profit margin, $7$ per cent, $($b$)$ Current ratio, $1\mathrm{.}3$; $($c$)$ Debt$-$to$-$equity, $1\mathrm{.}5$; $($d$)$ Inventory turnover, $2$; $($e$)$ Average collection period, $72$ days, $($f$)$ Interest cover, $8$ times, and $($g$)$ Return on assets, $3\mathrm{.}5$ per cent.