Lisa Rich spent every cent she had and then borrowed $1,000 to purchase an elaborate wardrobe worth $2,000 Ignoring all of Lisas other assets and liabilities, construct her balance sheet after the purchase Suppose that a year later, Lisas wardrobenow completely out of styleis worth only $100 If Lis...

Balance Sheet for Lisa Rich at purchase Assets Liabilities Personal ...

Lisa Rich spent every cent she had and then borrowed $1,000 to purchase an elaborate wardrobe worth

Question:

Lisa Rich spent every cent she had and then borrowed $1,000 to purchase an elaborate wardrobe worth $2,000. Ignoring all of Lisa’s other assets and liabilities, construct her after the purchase. Suppose that a year later, Lisa’s wardrobe—now completely out of style—is worth only $100. If Lisa has paid off $500 of her loan, what does her look like now? Comment on her present financial position.
Balance Sheet
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...