Santana Rey created Business Solutions on October 1, 2015. The company has been

Question

Santana Rey created Business Solutions on October 1, 2015. The company has been successful, and Santana plans to expand her business. She believes that an additional $96,000 is needed and is investigating three funding sources.

Santana’s sister Cicely is willing to invest $96,000 in the business as a common shareholder. Since Santana currently has about $144,000 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.

Santana’s uncle Marcello is willing to invest $96,000 in the business as a preferred shareholder. Marcello would purchase 960 shares of $100 par value, 9% preferred stock.

Santana’s banker is willing to lend her $96,000 on a 9%, 11-year note payable. She would make monthly payments of $1,148 per month for 11 years.

Santana Rey created Business Solutions on October 1, 2015. The company has been successful, and Santana plans to expand her business. She believes that an additional $96,000 is needed and is investigating three funding sources.

Explanation / Answer

Answer a

Bank a/c Dr.96000

To common stock a/c96000

Answer b

Bank a/c Dr 96000

To 9% prefered stock a/c96000

Answer C

Bank a/c Dr. 96000

To 9% prefered stock payable 96000

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