Problem
Brandon has recently applied for an additional bank loan, but has been turned down because his personal investment of $10,000 in the business is too small. Brandon feels he can improve his capital balance by completing the following 3 transactions: Transaction 1: He will sell his truck to a friend for $8,000 because almost all of the club's supplies are delivered for free. Transaction 2: He will borrow $10,000 from his brother who will insist on signing a formal loan agreement. Transaction 3: He will use the $18,000 (8,000+10,000) from above to pay off the accounts payable entirely. Answer the following questions for Brandon: What will be the revised (new) amounts for total assets and total liabilities after the 3 transactions above? (5 Thinking Marks) Will Brandon's 3 transactions improve his capital on the balance sheet? Why or why not. (2 Communication Marks) Will Brandon's chances for an additional bank loan be better or worse after the 3 transactions? Explain your reasoning. (2 Communication Marks) Explain to Brandon why an equation analysis sheet might be a better option than a balance sheet when tracking individual account changes such.