Accounting
27th Edition
ISBN: 9781337514071
Author: WARREN
Publisher: Cengage
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Question
Chapter 13, Problem 13.5CP
To determine
Case study
To comment: On the decision of the board of directors in its CEO personal loan case.
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Bernie Ebbers, the CEO of WorldCom, a major telecommunications company, was having personal financial troubles. Ebbers pledged a large stake of his WorldCom stock as security for some personal loans. As the price of WorldCom stock sank, Ebbers’s bankers threatened to sell his stock in order to protect their loans. To avoid having his stock sold, Ebbersasked the board of directors of WorldCom to loan him nearly $400 million of corporate assets at 2.5% interest to pay off his bankers. The board agreed to lend him the money.Comment on the decision of the board of directors in this situation.
Colleen Fernandez, president of Rhino Enterprises, applied for a $175,000 loan from First Federal Bank. The bank requested financial statements from Rhino Enterprises as a basis for granting the loan. Coleen has told her accountant to provide the bank with just the balance sheet. Colleen has decided to omit the other financial statements because there was a net loss during the past year. The accountant, Jim Long, only sent over the balance sheet to First Federal Bank
Did Jim act ethically or unethically? Why?
W17-2 Shirley Yu, president of SY Corporation, is concerned about several large stockholders
who have been very vocal lately in their criticisms of her leadership. She thinks they might
mount a campaign to have her removed as the corporation's CEO. She decides that buying
them out by purchasing their shares could eliminate them as opponents, and she is confident
they would accept a "good" offer. Yu knows the corporation's cash position is decent, so it has
the cash to complete the transaction. She also knows the purchase of these shares will
increase earnings per share, which should make other investors quite happy. (Earnings per
share is calculated by dividing net income available for the common shareholders by the
weighted-average number of shares outstanding. Therefore, if the number of shares
outstanding is decreased by purchasing treasury shares, earnings per share increases.)
Instructions:
Answer the following questions.
(a) Who are the stakeholders in this situation?
(b) What…
Chapter 13 Solutions
Accounting
Ch. 13 - Of two corporations organized at approximately the...Ch. 13 - Prob. 2DQCh. 13 - A corporation with both preferred stock and common...Ch. 13 - An owner of 2,500 shares of Simmons Company common...Ch. 13 - Prob. 5DQCh. 13 - What is the primary purpose of a stock split?Ch. 13 - Prob. 7DQCh. 13 - The treasury stock in Discussion Question 7 is...Ch. 13 - What are the three classifications of restrictions...Ch. 13 - Indicate how prior period adjustments should he...
Ch. 13 - A Dividends per share Reinhardt Furniture Company...Ch. 13 - Dividends per share Zero Calories Company has...Ch. 13 - Entries for issuing stock On May 23, Stoltz Realty...Ch. 13 - Entries for issuing stock On January 22, Zentric...Ch. 13 - Prob. 13.3APECh. 13 - Entries for cash dividends The declaration,...Ch. 13 - Prob. 13.4APECh. 13 - Entries for stock dividends Antique Buggy...Ch. 13 - Prob. 13.5APECh. 13 - Entries for treasury stock On May 27, Hydro...Ch. 13 - Reporting stockholders' equity Using the following...Ch. 13 - Reporting stockholders' equity Using the following...Ch. 13 - Retained earnings statement Rockwell Inc. reported...Ch. 13 - Retained earnings statement None Cruises Inc....Ch. 13 - Earnings per share Financial statement data for...Ch. 13 - Earnings per share Financial statement data for...Ch. 13 - Dividends per share Imaging Inc., a developer of...Ch. 13 - Dividends per share Lightfoot Inc., a software...Ch. 13 - Prob. 13.3EXCh. 13 - Prob. 13.4EXCh. 13 - Issuing stock for assets other than cash On April...Ch. 13 - Prob. 13.6EXCh. 13 - Issuing stock Willow Creek Nursery, with an...Ch. 13 - Issuing stock Work Place Products Inc., a...Ch. 13 - Entries for cash dividends The declaration,...Ch. 13 - Prob. 13.10EXCh. 13 - Prob. 13.11EXCh. 13 - Prob. 13.12EXCh. 13 - Prob. 13.13EXCh. 13 - Prob. 13.14EXCh. 13 - Treasury stock transactions Lawn Spray Inc....Ch. 13 - Prob. 13.16EXCh. 13 - Reporting paid-in capital The following accounts...Ch. 13 - Stockholders' Equity section of balance sheet The...Ch. 13 - Prob. 13.19EXCh. 13 - Retained earnings statement Sumter Pumps...Ch. 13 - Prob. 13.21EXCh. 13 - Statement of stockholders' equity The...Ch. 13 - EPS Junkyard Am, Inc., had earnings of 516,000 for...Ch. 13 - Prob. 13.24EXCh. 13 - EPS Caterpillar Inc. and Deere Company are two...Ch. 13 - Prob. 13.1APRCh. 13 - Prob. 13.2APRCh. 13 - Selected stock transactions The following selected...Ch. 13 - Entries for selected corporate transactions Morrow...Ch. 13 - Entries for selected corporate transactions...Ch. 13 - Prob. 13.1BPRCh. 13 - Stock transaction for corporate expansion Pulsar...Ch. 13 - Selected stock transactions Diamondback Welding ...Ch. 13 - Entries for selected corporate transactions Nav-Go...Ch. 13 - Entries for selected corporate transactions West...Ch. 13 - Prob. 13.1CPCh. 13 - Prob. 13.2CPCh. 13 - Communication Motion Designs Inc. has paid...Ch. 13 - Prob. 13.5CPCh. 13 - Prob. 13.6CP
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