Evaluate the three proposals for expansion

Assignment Help Accounting Basics
Reference no: EM13905209

Adria Lopez created Success Systems on October 1, 2013. The company has been successful, and Adria plans to expand her business. She believes that an additional $ 86,000 is needed and is investigating three funding sources. 

a. Adria's sister Cicely is willing to invest $ 86,000 in the business as a common shareholder. Since Adria currently has about $ 129,000 invested in the business, Cicely's investment will mean that Adria will maintain about 60% ownership, and Cicely will have 40% ownership of Success Systems. 

b. Adria's uncle Marcello is willing to invest $ 86,000 in the business as a preferred shareholder. Marcello would purchase 860 shares of $ 100 par value, 7% preferred stock. 

c. Adria's banker is willing to lend her $ 86,000 on a 7%, 10 year note payable. She would make monthly payments of $ 1,000 per month for 10 years.

Required:

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.

Reference no: EM13905209

What type of products or services provided by organization

What are the type of products or services provided by the organization? Select one of four basic financial statements that you feel this organization would typically use and

The health insurance portability and accountability act

The Health Insurance Portability and Accountability Act (HIPAA) was enacted in 1996 to provide federal protections for identifiable information. It is the first act that gi

Cash flows using the direct method for operating cash flows

Payments to employees, $19,3008. Interest and dividends collected, $7,1009. Other operating payments, $90010. Proceeds from issuance of bonds, $11,30011. Payments of interest,

Prepare the eliminating entries

Prepare the eliminating entries needed as of December 31, 2015, to complete a consolidation worksheet. Prepare a three-part consolidation worksheet as of December 31, 2015.

Partnership and share profits and losses

Merz, Dechter, and Flowers are partners in a partnership and share profits and losses 40%, 40%, and 20%, respectively. The partners have agreed to liquidate the partnership

Evaluate the reasons for the selection of the cost

Evaluate the reasons for the selection of the cost drivers in the discussion above and the potential impact the cost drivers will have on accurately reflecting costs and ove

Computation of pension expense

The computation of pension expense includes all the following except a. service cost component measured using current salary levels. b. interest on projected benefit obligatio

End of the pay period in which the overtime

Lidle Company needs time to calculate employees' overtime payments by the end of the pay period in which the overtime is worked. Can it pay the overtime payments with the fo

Reviews

Write a Review

 
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd