Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Accounting Basics Expert

Santana Rey created Business Solutions on October 1, 2011. The company has been successful and  Santana plans to expand her business. She believes that an additional $86,000 is needed and is  investigating these funding sources.

a. Santana's sister Cicely is willing to invest $86,000 in the business as a common shareholder.  Since Santana currently had 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.
b. Santana's Uncle Marcello is willing to invest $86,000 in the business as a preferred stockholder.  Marcello would purchase 860 shares of $100 par value, 7% preferred stock.
c. Santana's banker is willing to lend her $86,000 on a 7%, 10-years not payable. She would make  monthly payments of $1,000 per month for 10 years.

problems:
1. Prepare the journal entry to reflect the initial $86,000 investment under each of the options
(a), (b), and (c).
2. Evaluate the three proposals for expansion, providing the pros and cons of each option.
3. Which option did you recommend Santana adopt? describe.

 

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M942461

Have any Question? 


Related Questions in Accounting Basics

You are an accountant at wcp accountants and investment

You are an accountant at WCP Accountants and Investment Advisers. You have been approached by a client for your professional advice on investing in Woolworths Ltd. Your client supports Australian made products. Your clie ...

Accounting concepts individual problem setshort answer

Accounting Concepts Individual Problem Set Short Answer Questions- 1. True or false? The entity concept tells us that we should not co-mingle resources of one entity with another entity's resources. Explain your answer. ...

Individual case study assignmentcash flow forecasts and

Individual Case Study Assignment Cash flow forecasts and projected financial statements For the following Individual Case Study, you assume the role of someone who has been asked to provide a Business Report for a group ...

Q1 the following is a record of tiller corporations

Q1. The following is a record of Tiller Corporation's inventory transactions for the current month: January 1 Balance, 500 units @ $10 each January 5 Sale, 290 units @ $25 January 11 Purchase 300 units @ $12 each January ...

Practice questionsconsider a business where you have had

Practice questions: Consider a business where you have had work experience or any other organisation with which you are familiar. What aspects of the business do you think are important which are not shown in the financi ...

Provide a three page discussion in pdf to address the

Provide a three page discussion in PDF to address the following: • Changes to Rev Rec since initial issuance propose impact • Changes to IFRS 9 since initial issuance propose impact • Summary of the latest IFRS since 8 e ...

Explain what is meant by accruals and prepayments andhow

Explain what is meant by accruals and prepayments, and How they affect the trial balance.

Question 1 -jj industries is in the business of

Question 1 - JJ Industries is in the business of manufacturing large yachts. They have an agreement with one of their biggest customers that they will pay off their account of R18.5 million over the next three years, wit ...

While auditing the financial statements of forble corp

While auditing the financial statements of Forble Corp. (which are to be included in a Securities Act registration statement), Ernie, a certified public accountant, fails to review any of Forble's journal entries, does n ...

1 which of the following scenarios will qualify under

1. Which of the following scenarios will qualify under Section 351 as a nontaxable corporate formation? For those that do not qualify, what requirement of section 351 do they violate? a. Giner, Mary Ann, and Mrs. Howell ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

A cola-dispensing machine is set to dispense 9 ounces of

A cola-dispensing machine is set to dispense 9 ounces of cola per cup, with a standard deviation of 1.0 ounce. The manuf

What is marketingbullwhat is marketing think back to your

What is Marketing? • "What is marketing"? Think back to your impressions before you started this class versus how you

Question -your client david smith runs a small it

QUESTION - Your client, David Smith runs a small IT consulting business specialising in computer software and techno

Inspection of a random sample of 22 aircraft showed that 15

Inspection of a random sample of 22 aircraft showed that 15 needed repairs to fix a wiring problem that might compromise

Effective hrmquestionhow can an effective hrm system help

Effective HRM Question How can an effective HRM system help facilitate the achievement of an organization's strate