The proprietors of two businesses, L.L. Sams Company and Melinda Garcia Career Services, have sought business loans from you. To decide whether to make the loans, you have requested their balance sheet to view. L.L. Sams Company Balance Sheet August 31, 2004 Assets Cash $9,000 Accounts Receivable 14,000 Merchandise Inventory 85,000 Store supplies 500 Building 80,000 Furniture and fixtures 9,000 Land 14,000 Total assets $211,500 Liabilities Accounts Payable 12,000 Note Payable 18,000 Total Liabilities 30,000 Owner’s Equity L.L. Sams, capital 181,500 Total Liabilities And owner’s equity $211,500 Melinda Garcia Career Services Balance Sheet August 31, 2004 Assets Cash $11,000 Accounts Receivable 7,000 Office supplies 1,000 Office furniture 56,000 Land 169,000 Liabilities Accounts Payable $6,000 Note Payable 168,000 Total Liabilities 174,000 Owner’s Equity Melinda Garcia, capital 70,000 Total liabilities And owner’s equity $244,000 I would appreciate the positive response and answer. Please explain I would like to understand this question. Many Thanks!! Accounting is not my area. But the answer to this problem is obvious. Melinda is already up to her eyeballs in debt; she already owes 168,000+6000 on a business with total assets of 244,000. Further, the 168K far exceeds Melinda’s personally invested capital of 70,000. Compare this to Sam.

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