Lanni Products is a start-up computer software development firm. It currently owns computer equipment worth $32,000...

Lanni Products is a start-up computer software development firm. It currently owns computer equipment worth $32,000 and has cash on hand of $16,000 contributed by Lanni’s owners. Lanni takes out a bank loan. It receives $46,000 in cash and signs a note promising to pay back the loan over 3 years.

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

Assets		Liabilities & Shareholders' Equity
Cash		Bank loan
Computers		Shareholders' equity
Total		Total

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

b-1. Prepare the balance sheet after Lanni spends the $62,000 to develop its software product.

Assets		Liabilities & Shareholders' Equity
Software product		Bank loan
Computers		Shareholders' equity
Total		Total

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

c-1. 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 1,700 shares for $65 per share. Prepare the balance sheet after Lanni accepts the payment of shares from Microsoft.

Assets		Liabilities & Shareholders' Equity
Microsoft shares		Bank loan
Computers		Shareholders' equity
Total		Total

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

Solutions

Expert Solution

(a-1)

Lenni Product company
Balance sheet
ASSETS	Amounts ($)	Amounts ($)
Cash in hand (16000+46000)	62000
Computer equipment	32000
Total Assets (A)		94000

LIABILITIES & EQUITY
Bank Loans	46000
Shareholders equity (94000-46000)	48000
Total Liabilities & equity (B)		94000

(a-2)
Calculation of ratio of real assets to total assets
	Amounts
Value of real assets(computer)	32000
Value of total assets	94000
Ratio (32000/94000)	0.3404255
Rounded off upto 2 decimals	0.34 or 34%

(b-1)
Lenni Product company
Balance sheet
ASSETS	Amounts ($)	Amounts ($)
Software product	62000
Computer equipment	32000
Total Assets (A)		94000

LIABILITIES & EQUITY
Bank Loans	46000
Shareholders equity (94000-46000)	48000
Total Liabilities & equity		94000

(b-2)
Calculation of ratio of real assets to total assets
	Amounts
Value of real assets	94000
Value of total assets	94000
Ratio (94000/94000)	1
Rounded off upto 2 decimals	1 or 100%

(C-1)
Lenni Product company
Balance sheet
ASSETS	Amounts ($)	Amounts ($)
Microsoft shares 1700 shares @$65	110500
Computer equipment	32000
Total Assets (A)		142500

LIABILITIES & EQUITY
Bank Loans	46000
Shareholders equity (142500-46000)	96500
Total Liabilities & equity		142500

(C-2)
Calculation of ratio of real assets to total assets
	Amounts
Value of real assets	32000
Value of total assets	142500
Ratio (94000/94000)	0.2245614
Rounded off upto 2 decimals	0.22 or 22%

jeff jeffy answered 1 year ago

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