Question

In: Finance

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.)

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 2 years ago

Lanni Products is a start up computer software development firm. It currently owns computer equipment worth...

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. For each of the following transactions, identify the real and/or financial assets that trade hands. Are any financial assets created or destroyed in the transaction? a. 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. b. Lanni...

Lanni Products is a start-up computer software development firm. It currently owns computer equipment worth $24,000...

Lanni Products is a start-up computer software development firm. It currently owns computer equipment worth $24,000 and has cash on hand of $25,000 contributed by Lanni’s owners. Lanni takes out a bank loan. It receives $35,000 in cash and signs a note promising to pay back the loan over 3 years. a-1. Prepare the balance sheet just after it gets the bank loan. (Omit the "$" sign in your response.) Assets Liabilities & Shareholders' Equity Cash $ Bank...

Lanni Products is a start-up computer software development firm. It currently owns computer equipment worth $27,000...

Lanni Products is a start-up computer software development firm. It currently owns computer equipment worth $27,000 and has cash on hand of $22,000 contributed by Lanni’s owners. For each of the following transactions, identify the real and/or financial assets that trade hands. Are any financial assets created or destroyed in the transaction? Lanni takes out a bank loan. It receives $38,000 in cash and signs a note promising to pay back the loan over 3 years The bank loan is...

"Lanni Products is a start-up computer software development firm. It currently owns computer equipment worth $30,000...

"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. For each of the following transactions, identify the real and/or financial assets that trade hands. Are any financial assets created or destroyed in the transaction? Lanni takes out a bank loan. It receives $50,000 in cash and signs a note promising to pay back the loan over 3 years. Lanni uses the cash...

Lanni Products is a start-up computer software development firm. It currently owns computer equipment worth $34,000...

Lanni Products is a start-up computer software development firm. It currently owns computer equipment worth $34,000 and has cash on hand of $12,000 contributed by Lanni’s owners. For each of the following transactions, identify the real and/or financial assets that trade hands. Are any financial assets created or destroyed in the transaction? a. Lanni takes out a bank loan. It receives $42,000 in cash and signs a note promising to pay back the loan over 3 years. The bank loan...

Imagine Chiquita owns a start up – Swanky Dog Inc. – a firm that sells high...

Imagine Chiquita owns a start up – Swanky Dog Inc. – a firm that sells high end winter coats for dogs. Dog coats sell for $80 each without deviation. She only has enough capacity in her facility to produce a maximum of 10 coats per week. The fixed costs of production are $100. The total variable costs are as follows: price quantity FC VC 80 0 100 0 80 1 100 55 80 2 100 84 80 3 100 114...

Write the “Business Plan” of the Process of International Development-Internalization of a Start-up Firm. (use the...

Write the “Business Plan” of the Process of International Development-Internalization of a Start-up Firm. (use the stages of internalization of a firm, from any sector you choose, any foreign market you choose, use the best format of “business plan” or customize for your project)

Suppose that you are invested in a software development firm that designs automotive radar software for...

Suppose that you are invested in a software development firm that designs automotive radar software for robotics systems in cars. Your offices and most of the key employees who helped to start the company are in Tampa, but given expansion plans, your current location is no longer sufficient, and you need to decide on a location for your new headquarters. Now, your business is faced with a difficult decision: where do you locate your new headquarters? Option 1: Lansing, Michigan...

Hiroole sells computer equipment and home office furniture. Currently the furniture product line takes up approximately...

Hiroole sells computer equipment and home office furniture. Currently the furniture product line takes up approximately 50 percent of the company’s retail floor space. The president of Hiroole is trying to decide whether the company should continue offering furniture or concentrate on computer equipment. Below is a product line income statement for the company. If furniture is dropped, salaries and other direct fixed costs can be avoided. In addition, sales of computer equipment can increase by 13 percent without affecting...

You are considering setting up a software development business. To set up the enterprise you will...

You are considering setting up a software development business. To set up the enterprise you will need to buy equipment costing $100,000. This equipment will be depreciated straight line over 5 years to a zero salvage value. Its market value at the end of the 5 years will be zero. You will need to rent space at $5,000 per year for the five years of the project. You will also need to hire 5 software engineers at $50,000 each, per...