Investment Analysis
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 CSU'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?
1. CSU takes out a bank loan. It receives $10,000 in cash and signs a note promising to pay back the loan over 2 years.
2. CSU uses $20,000 of its own funds to finance the development of new financial planning software.
3. 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.
4. CSU sells the shares of stock for $60 per share and uses part of the proceeds to pay off the bank loan.
5. Prepare the balance sheet after CSU takes out the bank loan and spends the $20,000 to develop its software product. What is the ratio of real assets to total assets?