Santana Rey created Business Solutions on October 1, 2011. The company has been

Question

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 $124,000 is needed and is investigating three funding sources.

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 $124,000 is needed and is investigating three funding sources.

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 $124,000 is needed and is investigating three funding sources a. Santana's sister Cicely is willing to invest $124,000 in the business as a common shareholder. Since Santana currently has about $186,000 invested in the business, Cicely's investment will mean that antana will maintain about 60% ownership, and Cicely will have 40% ownership of Business Solutions b. Santana's uncle Marcello is willing to invest $124,000 in the business as a preferred shareholder Marcello would purchase 1,240 shares of $100 par value, 7% preferred stock c. Santana's banker is willing to lend her $124,000 on a 796, 11-year note payable. She would make monthly payments of $1,350 per month for 11 years Required 1. Prepare the journal entry to reflect the initial $124,000 investment under each of the options (a), (b), and (c). (Omit the "$" sign in your response.) General Journal Debit Credit (Click to select) Click to select (Click to select) Click to select (Click to select) Click to select

Explanation / Answer

A shareholders Share Caital Weight Santana's Shar $186,000                                  0.60 Cicely share $124000 ($186000/60%*40%)                                  0.40 total $310,000                                  1.00 JE Bank A/c Dr                     124,000.00 To Share Capital    124,000.00 (Being capital Contributed by Cicely) B Bank A/c Dr                     124,000.00 To Preference Share Capital    124,000.00 (Being Pref Shares purchased by Marcello) C Bank A/c Dr                     124,000.00 To 7% loan A/c    124,000.00 (Being Loan taken @7% intt monthly payable for 11 yrs)

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.