Serial Problem Business Solutions LO P1, C1, C2

Santana Rey created Business Solutions on October 1, 2017. The company has been successful, and Santana plans to expand her business. She believes that an additional $98,000 is needed and is investigating three funding sources.

Santanas sister Cicely is willing to invest $98,000 in the business as a common shareholder. Since Santana currently has about $147,000 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 $98,000 in the business as a preferred shareholder. Marcello would purchase 980 shares of $100 par value, 7% preferred stock.

Santanas banker is willing to lend her $98,000 on a 7%, 12-year note payable. She would make monthly payments of $1,008 per month for 12 years.

Required: 1. Prepare the journal entry to reflect the initial $98,000 investment under each of the options (a), (b), and (c).

Journal entry worksheet

Record the issue of common stock of $98,000 cash.

Note: Enter debits before credits.

Transaction	General Journal	Debit	Credit
a.

Journal entry worksheet

Record the issue of preferred stock of $98,000 cash.

Note: Enter debits before credits.

Transaction	General Journal	Debit	Credit
b.

Journal entry worksheet

Record the issue of a note for $98,000 loan from the bank.

Note: Enter debits before credits.

Transaction	General Journal	Debit	Credit
c.