Fellingham Software Company has assets of $850,000 and liabilities of $460,000. a. Prepare the owners equity section
Question:
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 profitable 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 Fellingham is organized as a sole proprietorship, a partnership, or a corporation? Explain.
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
Step by Step Answer:
a 1 Owners equity Johanna Small capital 390000 850000 in assets 460000 in liabilities 390000 2 Partn...View the full answer
Financial and Managerial Accounting the basis for business decisions
ISBN: 978-0078111044
16th edition
Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello
