You form an LLC using your last name and you decide to go into the real estate business; you are going to purchase a house and a condo. Through creative financing, you are going to purchase your first three-bedroom, single-family home for $35,800, but the bank will then give you an additional $35,000 for repair under this federal program for new investment buyers. You then find a three-bedroom condo, which you will also rent out. There is no special financing on that property, and the bank requires you to put 20% down. You agree on a purchase price of $115,000. You use part of the $35,000 excess ($23,000) to put down on the condo, leaving you $12,000 in your cash in bank account.
Below are your opening balances as of July 1, XXXX. (You choose the year, remember to be consistent with your dates.):
• Cash in Bank $12,000
• Assets (Building, Plant, Equipment or put in whatever asset you deem correct) $205,800 ($135,000 appraised value on Condo + $70,800 appraised value on House)
• Long Term Liabilities $162,800
o (70,800 house + 92,000 condo)
Your assignment is to set up this business as a new company; you can choose the set up properties as you see fit. You would then enter the opening balances as of 6/30/xx (the previous month) of the two accounts listed above. (Cash and Liabilities - you can choose to lump the liabilities together or separate those out.
PART 2 : In the previous module, you set up your new real estate LLC. This week you will create some transactions to demonstrate your ability to run this company in the software.
Complete the following transactions:
July 1 Collected rent on the home from Kim & Tom Olsen $650.00
July 1 Collected rent on the condo from Barb & John Hansen $1000.00
July 3 Received bill and paid legal fees to start up LLC to Robert Mason Attorney at Law $350
July 15 Pay July condo association fee to A & S Properties of $130.00
July 31 Paid mortgage to QT Mortgage for house
*Note: See Special link on how to set up a mortgage transaction $541.62 ($297.89 Principal and $243.73 Interest)
July 31 Paid mortgage to AB Credit Union for condo
*Note: See special link on how to set up a mortgage transaction $703.79 ($387.08 Principal and $316.71 Interest)
July 31 Paid Monthly Property Taxes to the City of Smallville on both properties total $398.50. House annually $2,155 (monthly $179.58) and Condo $2,627 annually (monthly $218.92)
Part 3: After you completed the transactions in the last module, you will then generate and submit the following reports:
• Balance Sheet as of 7/31/xx
• Income Statement (Profit and Loss Statement) 7-1-xx to 7-31-xx