Luis Fantano is a realtor. He buys and sells properties on his own and also earns commission as an agent for buyers and sellers. Fantano organized his business as a corporation on July 10, 2014. The business received $75,000 from Fantano and issued common shares in return. Consider these facts as of July 31, 2014:
a. Fantano owes $5,000 on a personal charge account with Visa.
b. Fantano's business owes $80,000 on a note payable for some undeveloped land acquired for a total price of $135,000.
c. Fantano has $5,000 in his personal bank account and $10,000 in the business bank account.
d. Office supplies on hand at the real estate office total $1,000.
e. Fantano's business spent $35,000 for a Century 21 real estate franchise, which entitles him to represent himself as a Century 21 agent. Century 21 is a national affiliation of independent real estate agents. This franchise is a business asset.
f. Fantano owes $125,000 on a personal mortgage on his personal residence, which he acquired in 2004 for a total price of $300,000.
g. Fantano acquired business furniture for $18,000 on July 15. Of this amount, his business owes $10,000 on open account at July 31.
Requirements
1. Prepare the balance sheet of the realty business of Luis Fantano Realtor Inc. at July 31, 2014.
2. Does it appear that Fantano's realty business can pay its debts? How can you tell?
3. Identify the personal items given in the preceding facts that would not be reported on the balance sheet of the business.