Fellingham Software Company has assets of $850,000 and liabilities of $460,000.a. Prepare the owners’ equity section of the company’s balance sheet under each of the followingindependent assumptions:1. The business is organized as a sole proprietorship, owned by Johanna Small.2. The business is organized as a partnership, owned by Johanna Small and Mikki Yato.Small’s equity amounts to $240,000.3. The business is a corporation with 25 stockholders, each of whom originally invested$10,000 in exchange for shares of the company’s capital stock. The remainder of thestockholders’ equity has resulted from profi table operation of the business.b. Assume that you are a loan officer at Security Bank. Fellingham has applied to your bank for a large loan to finance the development of new products. Does it matter to you whether Fell-ingham is organized as a sole proprietorship, a partnership, or a corporation? Explain.

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Fellingham Software Company has assets of $850,000 and liabilities of $460,000.
a. Prepare the owners’ equity section of the company’s balance sheet under each of the following
independent assumptions:
1. The business is organized as a sole proprietorship, owned by Johanna Small.
2. The business is organized as a partnership, owned by Johanna Small and Mikki Yato.
Small’s equity amounts to $240,000.
3. The business is a corporation with 25 stockholders, each of whom originally invested
$10,000 in exchange for shares of the company’s capital stock. The remainder of the
stockholders’ equity has resulted from profi table operation of the business.
b. Assume that you are a loan officer at Security Bank. Fellingham has applied to your bank for

a large loan to finance the development of new products. Does it matter to you whether Fell-
ingham is organized as a sole proprietorship, a partnership, or a corporation? Explain.

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