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Loan Evaluation for West Gate Auto Co.

Joan Whalen, owner of West Gate Auto Co., has submitted a loan application for $300,000 to Five Star National Bank. In support, Whalen provided a trial balance for the company's first year of operations. As an assistant loan officer, you must evaluate the request. Financial statements would be more useful than just a trial balance by showing profits, cash flows, and the company's financial position. The provided trial balance likely needs adjusting entries for expenses and revenue. Additional information needed before deciding on the loan includes details on the intended use of funds, collateral offered, and historical and projected financial performance.

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57 views1 page

Loan Evaluation for West Gate Auto Co.

Joan Whalen, owner of West Gate Auto Co., has submitted a loan application for $300,000 to Five Star National Bank. In support, Whalen provided a trial balance for the company's first year of operations. As an assistant loan officer, you must evaluate the request. Financial statements would be more useful than just a trial balance by showing profits, cash flows, and the company's financial position. The provided trial balance likely needs adjusting entries for expenses and revenue. Additional information needed before deciding on the loan includes details on the intended use of funds, collateral offered, and historical and projected financial performance.

Uploaded by

trilocksp Singh
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© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd

Assume that you recently accepted a position with Five

Star
Assume that you recently accepted a position with Five Star

Assume that you recently accepted a position with Five Star National Bank & Trust as an
assistant loan officer. As one of your first duties, you have been assigned the responsibility of
evaluating a loan request for $300,000 from West Gate Auto Co., a small proprietorship.
In support of the loan application, Joan Whalen, owner, submitted a "Statement of Accounts"
(trial balance) for the first year of operations ended October 31, 2019.

1. Explain to Joan Whalen why a set of financial statements (income statement, statement of
owner's equity, and balance sheet) would be useful to you in evaluating the loan request.
2. In discussing the "Statement of Accounts" with Joan Whalen, you discovered that the
accounts had not been adjusted at October 31. Analyze the "Statement of Accounts" and
indicate possible adjusting entries that might be necessary before an accurate set of financial
statements could be prepared.
3. Assuming that an accurate set of financial statements will be submitted by Joan Whalen in a
few days, what other considerations or information would you require before making a decision
on the loan request?

Assume that you recently accepted a position with Five Star


SOLUTION-- [Link]
position-with-five-star/

Unlock answers here [Link]

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