Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Santana Rey created Business Solutions on October 1, 2019. The company has been successful, and Santana plans to expand her business. She believes that an

Santana Rey created Business Solutions on October 1, 2019. The company has been successful, and Santana plans to expand her business. She believes that an additional $86,000 is needed and is investigating three funding sources.

  1. Santana's sister Cicely is willing to invest $86,000 in the business as a common shareholder. Since Santana currently has about $129,000 invested in the business, Cicely's investment will mean that Santana will maintain about 60% ownership and Cicely will have 40% ownership of Business Solutions.
  2. Santana's uncle Marcello is willing to invest $86,000 in the business as a preferred shareholder. Marcello would purchase 860 shares of $100 par value, 7% preferred stock.
  3. Santana's banker is willing to lend her $86,000 on a 7%, 10-year note payable. She would make monthly payments of $1,000 per month for 10 years.

Required:

1. Prepare the journal entry to reflect the initial $86,000 investment under each of the options (a), (b), and (c).

image text in transcribedimage text in transcribedimage text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Advanced Accounting

Authors: Debra JeterJames Reeve, Jonathan Duchac, Horace Brock, Paul Chaney

4th Edition

0470506989, 978-0470506981

More Books

Students also viewed these Accounting questions

Question

What do you think your problem does to you?

Answered: 1 week ago

Question

What reward will you give yourself when you achieve this?

Answered: 1 week ago