Adria Lopez created success systems on october 1, 2013. The company has been succesful and adria plans to expand her business. She believes that an additional $86,000 is needed and is investigating three funding sources.
Adrias sisyste cicely is willing to investing $86,000 in the business as common shareholder. Since Adria currently has about $129,000 invest in the business. Cicelys investment will mean that Adrian will mainain about 60% ownership and Cicely will have 40% ownership of success systems.
Adria uncles Marcello is willing to invest $86,000 in the business as prefered shareholder. Marcello would purchase 860 shares of $100 per value, 7% prefered stock.
Adria banker is willing to lend her $86,000 on 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 intial $86,000 investment under each of the options, a,b,c.
Evaluate the three proposals for expansion, providing the pros and cons of each option.
Which option do you recommend Adria adopt. Explain