Lanni Products is a start-up computer software development firm. It currently owns computer equipment worth $30,000 and has cash on hand of $20,000 contributed by Lanni's owners. Lanni takes out a bank loan. It receives $50,000 in cash and signs a note promising to pay back the loan over three years. Lanni uses the cash from the bank plus $20,000 of its own funds to finance the development of new financial planning software. Lanni sells the software product to Microsoft, which will market it to the public under the Microsoft name. Lanni accepts payment in the form of 1,000 shares of Microsoft stock. Lanni sells the shares of stock for $140 per share and uses part of the proceeds to pay off the bank loan. Required: a-1. Prepare its balance sheet just after it gets the bank loan. a-2. What is the ratio of real assets to total assets? (Round your answer to 1 decimal place.) b-1. Prepare the balance sheet after Lanni spends the $70,000 to develop its software product, with the software valued at cost. b-2. What is the ratio of real assets to total assets? (Round your answer to 1 decimal place.) c-1. Prepare the balance sheet after Lanni accepts the payment of shares from Microsoft. c-2. What is the ratio of real assets to total assets? (Round your answer to 2 decimal places.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Lanni Products is a start-up computer software development firm. It currently owns computer equipment worth $30,000 and has cash on hand of $20,000 contributed by Lanni's owners.

Lanni takes out a bank loan. It receives $50,000 in cash and signs a note promising to pay back the loan over three years.
Lanni uses the cash from the bank plus $20,000 of its own funds to finance the development of new financial planning software.
Lanni sells the software product to Microsoft, which will market it to the public under the Microsoft name. Lanni accepts payment in the form of 1,000 shares of Microsoft stock.
Lanni sells the shares of stock for $140 per share and uses part of the proceeds to pay off the bank loan.

Required:

a-1. Prepare its balance sheet just after it gets the bank loan.

a-2. What is the ratio of real assets to total assets? (Round your answer to 1 decimal place.)

b-1. Prepare the balance sheet after Lanni spends the $70,000 to develop its software product, with the software valued at cost.

b-2. What is the ratio of real assets to total assets? (Round your answer to 1 decimal place.)

c-1. Prepare the balance sheet after Lanni accepts the payment of shares from Microsoft.

c-2. What is the ratio of real assets to total assets? (Round your answer to 2 decimal places.)

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e-1. Prepare its balance sheet just after it gets the bank loan
Computers
Takal
Assets
2. What is the ratio of real assets to total assets? (Round your answer to 1 decimal place)
Rate of real to total assets
Software product
Computers
Total
b-1. Prepare the balance sheet after Lanni spends the $70,000 to develop its software product, with the software valued at cost
Assas
Labs&Shades Equity
Ratio of real to total assets
Liabities & Shareholde Equity
Shareholders egity
Ta
b-2. What is the ratio of real assets to total assets? (Round your answer to 1 decimal place.)
Assets
Microsot shares
Computers
Total
c-1. Prepare the balance sheet after Lanni accepts the payment of shares from Microsoft
Bank loan
Shareholders equity
Total
Ratio of real to total
Liabilities & Shareholders Equity
Bank loan
Shareholders' equity
Total
e-2. What is the ratio of real assets to total assets? (Round your answer to 2 decimal places)

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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