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.
Prepare the journal entry to reflect the initial $86,000 investment under each of the options (a), (b), and (c).