A ACCT 2010 Final ExamMailingsnvestigating three funding sources.ReviewViewSantana's sister Cicely is willing to invest $86,000 in the business as a commshareholder. Because Santana currently has about $129,000 invested in tibusiness, Cicely's investment will mean that Santana will maintain about 60ownership and Cicely will have 40% ownership of Business Solutions.Santana's uncle Marcello is willing to invest $86,000 in the business as a preferreshareholder. Marcello would purchase 860 shares of $100 par value, 7% preferrestock.Santana's banker is willing to lend her $86,000 on a 7%, 10-year note payable. Shwould make monthly payments of $1,000 per month for 10 years.equired:a) Prepare the journal entry to reflect the initial $86,000 investment under each of the options.(Clearly show debit and credit sides, while also indicating if each of the accounts isincreasing or decreasing.)IncreaseDecrease(Yes /No)(Yes /No)AccountDebitCreditCash86,000Common Stock86,000Issuance of common stockCashPreferred stockIssuance of preferred stockCashNotes payableb) Evaluate the three proposals for expansion, providing the pros and cons of each option.(Minimum 70 words)c) Which option do you recommend Santana adopt? (Minimum 40 words)d) Imagine Business Solutions was not successful, but instead was accumulating losses, andthe only option was to get a $100,000, 10-year note payable to get a cash influx and keepoperations going. Would you recommend Santana get the loan? Explain your answer.(Minimum 50 words)

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Description: A ACCT 2010 Final ExamMailingsnvestigating three funding sources.ReviewViewSantana's sister Cicely is willing to invest $86,000 in the business as a commshareholder. Because Santana currently has about $129,000 invested in tibusiness, Cicely's inves

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Answered: Increase Decrease (Yes / No) (Yes / No)…

Business

Accounting

Increase Decrease (Yes / No) (Yes / No) Account Debit Credit Cash 86,000 Common Stock 86,000 Issuance of common stock Cash Preferred stock Issuance of preferred stock Cash Notes payable

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

ChapterC1: Eco Products, Inc

Section: Chapter Questions

Problem kA

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