Balance Sheet Question?

Answers:0   |   LastUpdateAt:2012-08-13 07:40:37  

Asked at 2012-08-13 07:40:37
Brandon Adams has just opened a very successful dance club . Brandon has recently requested an additional bank loan , but has been rejected because their personal investment in the company is too small. Brandon believes it can improve its balance of capital , completing the three following operations :

1) It is going to sell his truck to a friend for $ 8000 dollars because almost all club supplies are delivered free. (The truck was $ 8000 dollars on the balance sheet . )

2) It will borrow $ 10,000 from his brother, who will insist on signing a formal loan agreement .

3) It will use the money from their first two operations to reduce the balance of accounts payable to zero.

Question ( Note : The
A P is $ 12000, Bank loan to pay is $ 30000, total liabilities of $ 42000, total assets and total liabilities and equity is $ 52000, and net worth is $ 10000.
1) Will Brandon possibilities of additional bank loans to be better or worse after the transaction ?

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