The plane Sam wants to buy is expected to cost $500,000. The freight charges to deliver the plane will amount to $5,000 and the plane is expected to last 15 years with proper maintenance and will have a salvage value of $20,000. Sam depreciates his assets on a straight-line basis. Sam would like you to provide the initial recording of the asset. You may assume that payment will be some form of loan for this portion and that the $5,000 delivery will be paid in cash; in other words, it will not be part of the nancing. Sam would also like you to prepare the journal entry to record depreciation for the rst year.

Shares:

Issue 50,000 common shares at $10 per share to private investors. Sam currently has 100,000 common shares outstanding, with his wife holding half and Sam holding half. He also has 5,000 preferred shares outstanding. They are all owned by his father and are cumulative, paying a dividend of $4 per share. For the rst time, no dividends were paid last year. It would be expected that a $100,000 dividend would be declared on November 1 of this year with a payment date of February 1. Sam would like the journal entry for the issuance of the shares and any dividend entries for this year under the assumption the dividend does get declared.

Required

Should Sam apply this kind of financial option to purchase the plane?

Include the supporting ideas, facts, and calculations that back up your argument?

Include the advantages and disadvantages of issuing shares

Qualitative and quantitative