Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 1, Problem 7PS
For each transaction, identify the real and/or financial assets that trade hands. Are any financial assets created or destroyed in the transaction? (LO 1-2)
a. Toyota takes out a bank loan to finance the construction of a new factory.
b. Toyota pays off its loan.
c. 'Toyota uses $10 million of cash on hand to purchase addiiona1 inventory of spare auto parts.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Choose the correct answer in the following statements about financial and real assets.
Required:
a. Toyota takes out a bank loan to finance the construction of a new factory.
Toyota (Click to select) ✓a (Click to select)
transaction.
asset-the factory. The loan is a [(Click to select) asset that is (Click to select) in the
b. Toyota pays off its loan.
When the loan is repaid, the (Click to select) asset is (Click to select) but the (Click to select) asset continues to exist.
c. Toyota uses $10 million of cash on hand to purchase additional inventory of spare auto parts.
The cash is a (Click to select) ✓ asset that is traded in exchange for a [(Click to select) asset, inventory.
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.b. Lanni uses the cash from the bank plus $20,000 of its own funds to finance the development of new financial planning software. c. Lanni sells the software product to Microsoft, which will market it to the public under the Microsoft name. Lanni accepts payment in the form of 2,500 shares of Microsoft stock.d. Lanni sells the shares of stock for $50 per share and uses part of the proceeds to pay off the bank loan.
Lanni Products is a start-up computer software development firm. It currently owns computer equipment worth $31,000 and has cash on hand of $18,000 contributed by Lanni’s owners.
For each of the following transactions, identify the real and/or financial assets that trade hands. Choose one option for following blank: A. real asset. B. financial asset. C. real liability. D. Finanical liability.
The bank loan is a Financial liability for Lanni, and a Financial asset for the bank. The cash Lanni receives is a Financial asset .
1. The new financial asset destroyed or created is Lanni's promissory note to repay the loan.
Lanni uses the cash from the bank plus $18,000 of its own funds to finance the development of new financial planning software.
Lanni transfers financial asset (cash) to the software developers. In return, Lanni receives the completed software package, which is a real asset.
Lanni exchanges the real asset (the software) for a Financial asset, which is 1,400 shares of…
Chapter 1 Solutions
Essentials Of Investments
Ch. 1 - Prob. 1PSCh. 1 - Prob. 2PSCh. 1 - Prob. 3PSCh. 1 - Prob. 4PSCh. 1 - Prob. 5PSCh. 1 - Prob. 6PSCh. 1 - For each transaction, identify the real and/or...Ch. 1 - Prob. 8PSCh. 1 - Lanni Products is u start-.up computer software...Ch. 1 - Reconsider Lanni Products from Problem 9. (LO 1-2)...
Ch. 1 - Prob. 11PSCh. 1 - Examine the balance sheet of commercial banks in...Ch. 1 - Prob. 13PSCh. 1 - Prob. 14PSCh. 1 - Prob. 15PSCh. 1 - Prob. 16PSCh. 1 - Why would you expect securitization o take place...Ch. 1 - Prob. 18PSCh. 1 - Give an examp1e of three financial intermediaries,...Ch. 1 - Firms raise capital from investors by issuing...Ch. 1 - The average rate of return on investments in large...Ch. 1 - Prob. 22PSCh. 1 - Prob. 1WMCh. 1 - Prob. 2WMCh. 1 - Prob. 3WMCh. 1 - Prob. 4WM
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Similar questions
- Lanni Products is a start-up computer software development firm. It currently owns computer equipment worth $31,000 and has cash on hand of $18,000 contributed by Lanni’s owners. For each of the following transactions, identify the real and/or financial assets that trade hands. Choose one option for following blank: A. real asset. B. financial asset. C. real liability. D. Finanical liability. 1. Lanni takes out a bank loan. It receives $48,000 in cash and signs a note promising to pay back the loan over 3 years. The bank loan is a (select an option) for Lanni, and a (select an option) for the bank. The cash Lanni receives is a (select an option). 2. Lanni uses the cash from the bank plus $18,000 of its own funds to finance the development of new financial planning software. Lanni transfers (select an option) (cash) to the software developers. In return, Lanni receives the completed software package, which is a (select an option). 3. Lanni sells the software product to Microsoft,…arrow_forward4/2 Purchased a company automobile for $32,000, with a cash down payment of $1,000 and the remaining $31,000 was financed through the bank (Hint: I still need to PAY this). how to solve this problem? with puting into general journal as debit and credit sidearrow_forwardns are landatory Question (2) Jerry has purchased $5,000 of new computer equipment for his company. He is able to pay $1,000 in cash; the balance is financed over a period of 36 months. How will this transaction be recorded on the balance sheet of the company? 0 O Subtract $1,000 from cash; add $5,000 to net assets; add $5,000 to long-term liabilities. O Subtract $1,000 from cash; add $5,000 in fixed assets; add $4,000 in long-term liabilities. O Subtract $1,000 from cash; add $4,000 in fixed assets; add $4,000 in long-term liabilities. O Add $5,000 in fixed assets; add $4,000 in long-term liabilities and add $1,000 in current liabilities. Bookmark for reviewarrow_forward
- Required: Prepare the entries to record the above transactions. 2. Lileth Adriano, who plans to go abroad, is selling her mini-donut business. Her friend, Benita Solido is interested to buy it but can only afford to pay P350,000. The following are the assets of Adriano's business: Book Value Market Value Equipment (net of accumulated depreciation of P25,000) Furniture and Fixtures (net of accumulated depreciation of P5,000) Raw Materials Franchise Right P350,000 P300,000 75,000 50,000 35,000 25,000 150,000 100,000 Total P610,000 P475,000 a. How much is the net worth assuming there is a mortgage note of P150,000 attached to the equipment? b. Will Benita Solido be able to afford to buy the business? Make the entry in the books of Benita. C. Page 1 -arrow_forwardMr. Steve Persian hired Elizabeth to prepare the Statement of Financial Position of his business. To prepare the statement, Elizabeth identified the following assets and liabilities of Mr. Persian: a. Cash deposited in YKY Bank amounting to P100, 000 b. He has uncollected sales from customers amounting to P50, 000 c. The total amount of merchandise left inside the warehouse is P35, 000 d. Steve paid in advance the rent amounting to P15, 000 for one year. e. The machineries and equipment amounted to P150, 000 f. He bought the materials from his suppliers amounting to P30, 000 and promised to pay the said amount one month after the end of the year. g. He paid the contributions of his employees such as SSS, Philhealth and Pag ibig amounting to P6, 500 h. Outstanding balance to Meralco is amounting to P3, 500 i. He acquired a 2 year loan from YKY Bank amounting to P45, 000.arrow_forward2. For each of the following transactions, place an X in the table to indicate whether direct or indirect financing is utilized: Financing Activity Direct Indirect Jim and Mary obtain a mortgage for a new house from their commercial bank Juanita deposits a portion of her pay each month into a savings account Delta Airlines uses an investment to sell $25 billion in corporate debt Airbus North America borrows $5 million from Bank of America for working capital Boeing draws on its credit line at Citibank borrowing $20 billion American Airlines issues new stock to increase cash A technology start-up company receives funding from a venture capitalist firm An entrepreneur borrows money from family members to start a new businessarrow_forward
- Complete the columns to show the effect of the following transactions: Transaction Asset Liability Capital (a) Bought a motor Van on credit $500 (b) Repaid by cash a loan owed to P Smith $1,000 (c) Bought goods for $150 paying by cheque (d) The owner puts a further $5,000 cash into the business (e) A debtor returns to us $80 goods. we agree to make an allowance for them (f) Bought goods on credit $220 (g) The owner takes out $100 cash for his personal use.arrow_forwardA business, Sandy's Traders, was opened on 1 January 2020 when the owner invested R25 000 and R100 000 was borrowed from the local bank. Assets in the business included: R6 000 R30 000 R77 000 Computer Inventory Motor car Cash in the bank 7 What was the amount of cash left in the bank account? Answer: Iarrow_forwardDirections: Read the given transaction below. Analyze, which of the amounts cited above do you think will be included in the business' financial reports? Why and what are reasons for including them? Mr. Susano, a business owner of a Travel Agency invested 100 Million for additional twenty Electric Jeepneys worth P2,000,000.00 which the owner only paid half and avail the Auto Loan from Suzuki Motors worth P 1,000.000.00. He acquired a 1 hectare lot worth 15 Million for his automobiles, construct a small office spaces for his staff and installed solar panels and paid 10 Million for the construction company including the labor and solar panel. Secured all the Permit and Licenses worth P69,000.00. During the first month of operation, he then paid the Salaries and Wages of his three office staffs and twenty-five drivers worth P80,000. Paid Insurance for his employees worth 29,000. The business consumed water worth P28,000. For one month, the business generated P1,000,000.00 revenue. lolilarrow_forward
- You opened a novelty store called "The Awesome Shop" on January 2, 2018. The following were the transactions during the year: 1. Provided P100,000 cash as initial investment. 2. Obtained a P50,000 loan. 3. Acquired furniture and fixtures for P80,000 cash. 4. Acquired inventory on account for P60,000. 5. Sold goods on cash basis for P200,000. The cost of sales is P20,000. 6. Sold goods on account for P300,000. The cost of sales is P30,000. 7. Paid supplies expense for P20,00o cash. 8. Paid rent expense of P180,00o. 9. Paid utilities expense of P40,000. 10. Collected P240,000 accounts receivable. 11. Paid P30,000 accounts payable. 12. Made total drawings of P25,000. REQUIREMENTS: a. Record the transactions in the journal. b. Post the transactions in the ledger. c. Prepare the unadjusted trial balance on December 31, 2018.arrow_forwardThe following cases relate to the valuation of assets. Consider each case independently.a. World-Wide Travel Agency has office supplies costing $1,700 on hand at the balance sheet date. These supplies were purchased from a supplier that does not give cash refunds. World-Wide’s management believes that the company could sell these supplies for no more than $500 if it were to advertise them for sale. However, the company expects to use these supplies and topurchase more when they are gone. In its balance sheet, the supplies were presented at $500.b. Perez Corporation purchased land in 1957 for $20,000. In 2011, it purchased a similar parcelof land for $300,000. In its 2011 balance sheet, the company presented these two parcels ofland at a combined amount of $320,000. c. At December 30, 2011, Lenier, Inc., purchased a computer system from a mail-order sup-plier for $14,000. The retail value of the system—according to the mail-order supplier—was $20,000. On January 7, however, the system…arrow_forwardSellco established a car dealership in a town. This dealership is popular as no other town nearby has a showroom. The owner of this dealership wanted to sell and retire. Purchaseco came forward to buy this dealership for a price of $380,000 On the date of sale the balance sheet of Sellco is as under: Assets Cash Accounts Receivable Inventory Furniture Buildings Accounts Receivable Inventory Furniture Buildings Loans payable Income tax payable 64,400 34,200 Accounts Payable Loans Payable 245,100 Income tax payable 94,600 Salaries payable 244,900 Retained earnings 683,200 The fair market values of the assets and liabilities revealed the following: Liabilities 28,900 214,300 72,600 366,800 255,300 10,400 Please find out thegoodwill / bargain purchase amount and also prepare the journal entry on the day of acquision 106,300 249,600 12,100 6,800 308,400 683,200arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
7.2 Ch 7: Notes Payable and Interest, Revenue recognition explained; Author: Accounting Prof - making it easy, The finance storyteller;https://www.youtube.com/watch?v=wMC3wCdPnRg;License: Standard YouTube License, CC-BY