Early in January 2013 Hopkins Company is preparing for a

Early in January 2013, Hopkins Company is preparing for a meeting with its bankers to discuss
a loan request. Its bookkeeper provided the following accounts and balances at December 31,
2012.Except for the following items, Hopkins has recorded all adjustments in its accounts.1.
Cash includes $500 petty cash and $15,000 in a bond sinking fund.2. Net accounts receivable
is comprised of $52,000 in accounts receivable and $13,500 in allowance for doubtful
accounts.3. Equipment had a cost of $112,000 and accumulated depreciation of $28,000.4. On
January 8, 2013, one of Hopkins’ customers declared bankruptcy. At December 31, 2012, this
customer owed Hopkins $9,000.AccountingPrepare a corrected December 31, 2012, balance
sheet for Hopkins Company.AnalysisHopkins’ bank is considering granting an additional loan in
the amount of $45,000, which will be due December 31, 2013. How can the information in the
balance sheet provide useful information to the bank about Hopkins’ ability to repay the
loan?PrinciplesIn the upcoming meeting with the bank, Hopkins plans to provide additional
information about the fair value of its equipment and some internally generated intangible
assets related to its customer lists. This information indicates that Hopkins has significant
unrealized gains on these assets, which are not reflected on the balance sheet. What objections
is the bank likely to raise about the usefulness of this information in evaluating Hopkins for the
loanrenewal?
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Early in January 2013 Hopkins Company is preparing for a
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