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CSU-Products is a start-up computer software development firm. It currently owns computer equipment worth $40,000 and has cash on hand of $10,000 contributed by CSUs
CSU-Products is a start-up computer software development firm. It currently owns computer equipment worth $40,000 and has cash on hand of $10,000 contributed by CSUs 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. CSU takes out a bank loan. It receives $10,000 in cash and signs a note promising to pay back the loan over two years.
- b. CSU uses the cash from the bank plus $20,000 of its own funds to finance the development of new financial planning software.
- c. CSU sells the software product to Microsoft, which will market it to the public under the Microsoft name. CSU accepts payment in the form of 1,000 shares of Microsoft stock.
- c. CSU sells the shares of stock for $60 per share and uses part of the proceeds to pay off the bank loan.
Prepare the balance sheet after CSU spends the $30,000 to develop its software product. What is the ratio of real assets to total assets?
Please submit your balance sheet and analysis in an Excel document.
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