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Lester's Home Healthcare Services

Assets = Liabilities + Stockholders' Equity: How do I apply this formula to the problem below

How does this problem balance out with the formula A = L + SE?...what goes where?

Lester's Home Healthcare Services was organized on January 1, 2005, by four friends. Each organizer invested $10K in the company and, in turn, was issued 8,000 shares of stock. To date, they are the only stockholders. During the first month (Jan. '05) the company had the following six events:

a. Collected a total of $40K from the organizers and, in turn, issued the shares of stock.
b. Purchased a building for $65K, equipment for $16K, and three acres of land for $12K; paid $13K in cash and signed a note for the balance, which is due to be paid in 15 years.
c. One stockholder reported to the company that 500 shares of his Lester's stock had been sold and transferred to another stockholder for $5K cash.
d. Purchased supplies for $3K cash.
e. Sold one acre of land for $4K cash to another company.
f. Lent one of the sharehholders $5K for moving costs, receiving a signed six-month note from the shareholder.

Is this a coporation or partnership? Why?

Solution Preview

Lester's Home Healthcare Services was organized on January 1, 2005, by four friends. Each organizer invested $10K in the company and, in turn, was issued 8,000 shares of stock. To date, they are the only stockholders. During the first month (Jan. '05) the company had the following six events:

a. Collected a total of $40K from the organizers and, in turn, issued the shares of stock.
b. Purchased a building for $65K, equipment for $16K, and three acres of land for $12K; paid $13K in cash and signed a note for the balance, which is due to be paid in 15 years.
c. One stockholder reported to the company that 500 shares of his Lester's stock had been sold and transferred to another stockholder for $5K cash.

d. Purchased supplies for $3K cash.
e. Sold one acre of land for $4K cash to another company.
f. Lent one of the sharehholders $5K for moving costs, receiving a signed six-month note from the shareholder.
Kindly see the attached excel file

Is this a coporation or partnership? Why?
Partnership
A partnership (also ...

Solution Summary

Lester's Home Healthcare Services was organized on January 1, 2005, by four friends. Each organizer invested $10K in the company and, in turn, was issued 8,000 shares of stock. To date, they are the only stockholders. During the first month (Jan. '05) the company had the following six events:

$2.19