Extracted text: CP 4-5 Financial statements 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 proprietor- ship. 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, 20Y6. West Gate Auto Co. Statement of Accounts October 31, 20Y6 Cash...... 5,000 Billings Due from Others.. Supplies (chemicals, etc.)..... Building..... 40,000 7,500 222,300 Equipment.... 50,000 Amounts Owed to Others.. 31,000 Investment in Business.. 179,000 Service Revenue...... 215,000 75,000 Wages Expense.... Utilities Expense..... 10,000 Rent Expense..... 8,000 Insurance Expense. 6,000 Other Expenses..... 1,200 425,000 425,000 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. Joan Whalen in a few days, what other considerations or information would before making a decision on the loan request? Assuming that an accurate set of financial statements will be submitted by you require