a financial liability
financial asset
financial asset
created
Problem 1-7
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 3 years.
Data
computer equipment 30000
cash on hand 20000
loan 50000
b-1 Assets liabilities & Shareholders’ equity
software products 70000 bank loan 50000
computers 30000 shareholders’ equity 50000
total 100000 total 100000
b-2 ratio real to total 1
Problem 1-8
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 $50,000 in cash and signs a note promising to pay back the loan over 3 years.
a-1.Prepare the balance sheet just after it gets the bank loan. (Omit the “$” sign in your response.)
Assets Liabilities & Shareholders’ Equity Cash$ Bank 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.)
Ratio of real assets to total assets
Data
total real assets 166.1 billion
total 13926 billion
Problem 1-9
Examine the balance sheet of commercial banks in the following table.
Assets$ Billion% Total Liabilities and Net Worth$ Billion% Total Real assets Liabilities Equipment and premises$121.3 0.9% Deposits$10,260.3 73.7% Other real estate 44.8 0.3
funds 743.5 5.3 Federal funds and repurchase
agreements 478.8 3.4 Total real assets$166.1 1.2% Other 855.8 6.1 Total liabilities$12,338.4 88.6% Financial assets Cash$1,335.9 9.6% Investment
a primary-market transaction
Problem 1-10
Consider Figure 1.5, which describes an issue of American gold certificates.
a.Is this issue a primary or secondary market transaction? Secondary-market transactionPrimary-market transaction