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Stealth Sky Views (SSV) is a private company that operates lourist tides from St John's Newfoundland

Accounting

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Stealth Sky Views (SSV) is a private company that operates lourist tides from St John's Newfoundland. Turists pay for a one-hour ride that takes them to Signal Hill and up the coast. Sam, the owner, has noticed a significant increase in his rider base and is now looking at expanding by purchasing a new plane. Sam is considering several finance options

 

(Exhibit I) and would like you, his accountant, to assist Required Provide Sam with ar that calculates cach of the three financing options he has laid out, along with journal entries where requested He would ideally like to minimize the amount of cash that he is required to repay over the next three

 

years in onder to cover operating costs. He would also like you to comment on the advantages and disadvantages of

 

various options. You may assume that the receipt of any cash and the purchase of the plane take place on January

 

and that SSV has a December 31 year end

Financing option #1

Obtain a S500.000 loan from the Royal Bank of Ryan. The loan would be repayable in five equal principal payments plus interest on December 31 of each year. The loan would carry an interest rate of 6. Sam would like to see the carry for the receipt of the loan and the recording of the journal entries on December 31.