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 $100,000 is needed and is investigating three funding sources.

Santana's sister Cicely is willing to invest $100,000 in the business as a common shareholder. Since Santana currently has about $150,000 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 $100,000 in the business as a preferred shareholder. Marcello would purchase 1,000 shares of $100 par value, 8% preferred stock.

Santana’s banker is willing to lend her $100,000 on a 8%, 10-year note payable. She would make monthly payments of $1,213 per month for 10 years.

Prepare the journal entry to reflect the initial $100,000 investment under each of the options (a), (b), and (c). (Omit the "$" sign in your response.)

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 $100,000 is needed and is investigating three funding sources.

Explanation / Answer

Answer:

Journal entries:

a) Cash Dr. 100000

To common stock.........100000

b) Cash Dr. 100000

To preferred stock........100000

c) Cash Dr. 100000

To notes payable..........100000

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

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