The founder of Erenza asks us to assist her in accounting and analysis of the corporation'sbonds, which have an annual contract rate of 8%. She wants to know the business andaccounting implications of further debt issuances as she looks for ways to finance thegrowth of Erenza, The following Tableau Dashboard is provided to help us address herquestions and provide recommendations for her business decisions.1(a). Prepare journal entries to record the issuance of Frenza bonds on January 1, Year 1.1(b). Prepare journal entries to record the first and second interest payments on June 30,Year 1, and December 31, Year 1.1(c). Prepare journal entries to record the maturity of the bonds on December 31, Year 3.2. Frenza needs to raise money to purchase new equipment. The founder is concernedabout losing ownership control of her company. Which of the following ways to raisemoney would we recommend?3. Erenza needs to raise money to purchase more inventory. The founder is concernedabout the company's ability to make required cash payments when cash flows are low.Which of the following ways to raise money would we recommend?

The objective of the question is to understand the accounting implications of issuing bonds and to…

Answered: The founder of Erenza asks us to assist…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Santana Rey has consulted with her local banker and is considering financing an expansion of her business by obtaining a long-term bank loan. Selected account balances at March 31, 2020, for Business Solutions follow. Total assets . $120,268 Total liabilities . $875 Total equity $119,393 Required 1. The bank has offered a long-term secured note to Business Solutions. The bank’s loan procedures require that a client’s debt-to-equity ratio not exceed 0.8. As of March 31, 2020, what is the maximum amount that Business Solutions could borrow from this bank? 2. If Business Solutions borrows the maximum amount allowed from the bank, what percentage of assets would be financed (a) by debt and (b) by equity? 3. What are some factors Santana Rey should consider before borrowing the funds?
Answer the second question and expound your answer thank you
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