Serial Problem 2 - Question 4

Santana Rey created Business Solutions on October 1, 2021. The company has been successful, and Santana plans to expand her business. She believes that an additional $88,000 is needed and is investigating three funding sources.

Santanas sister Cicely is willing to invest $88,000 in the business as a common shareholder. Because Santana currently has about $132,000 invested in the business, Cicelys investment will mean that Santana will maintain about 60% ownership and Cicely will have 40% ownership of Business Solutions.

Santanas uncle Marcello is willing to invest $88,000 in the business as a preferred shareholder. Marcello would purchase 880 shares of $100 par value, 8% preferred stock.

Santanas banker is willing to lend her $88,000 on a 8%, 10-year note payable. She would make monthly payments of $1,068 for 10 years.

Required: 1. Prepare the journal entry to reflect the initial $88,000 investment under each of the options a, b, and c.