Financial Accounting
15th Edition
ISBN: 9781337272124
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Question
Chapter 13, Problem 2CP
To determine
Discuss whether Person L is behaving in a professional manner.
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Lou Hoskins and Shirley Crothers are organizing Red Lodge Metals Unlimited Inc. to undertake a high-
risk gold-mining venture in Canada. Lou and Shirley tentatively plan to request authorization for
400,000,000 shares of common stock to be sold to the general public. Lou and Shirley have decided to
establish par of $0.03 per share in order to appeal to a wide variety of potential investors. Lou and
Shirley feel that investors would be more willing to invest in the company if they received a large
quantity of shares for what might appear to be a "bargain" price.
Discuss whether Lou and Shirley are behaving in a professional manner.
Happy Harry Hoskins and Crabby Cynthia Crowders are organizing Red Lodge Metals Unlimited, Inc., to undertake a high risk gold mining venture in Canada. Mr. Hoskins and Ms.
Crowders tentatively plan to request authorization for 400,000,000 shares of common stock to be sold to the general public.
Mr. Hoskins and Ms. Crowders have decided to establish par value at $0.03 per share in order to appeal to a wide variety of potential investors. They believe that investors
would be more willing to invest in a company if investors received a large quantity of shares for what might appear to be a "bargain" price.
Discussion:
Are Mr. Hoskins and Ms. Crowders acting ethically? Please discuss.
Recently, you were contacted by a friend who was
thinking of signing a Joint Venture agreement to
fund a new shopping center to be built in
Melbourne. Along with several other investors,
each party will invest $25,000 to the venture in
order to pay for the building and construction work.
Your friend knows several of the other investors and
is looking forward to working closely with the other
investors on this new project, however your friend
feels very strongly about keeping his business
affairs completely separate from those of other
investors.
Required: What advice and/ or warning would you
give your friend before signing the Joint Venture
contract? You must refer to legislation and/ or case
law and clearly define all business structures that
may impact on the advice you give your friend.
Chapter 13 Solutions
Financial Accounting
Ch. 13 - Of two corporations organized at approximately the...Ch. 13 - A stockbroker advises a client to buy preferred...Ch. 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 - A corporation reacquires 60,000 shares of its own...Ch. 13 - The treasury stock in Discussion Question 7 is...Ch. 13 - What are the three classifications of restrictions...Ch. 13 - Prob. 10DQ
Ch. 13 - Dividends per share Reinhardt Furniture Company...Ch. 13 - Prob. 1PEBCh. 13 - Entries for issuing stock On May 23, Stoltz Realty...Ch. 13 - Entries for issuing stock On January 22, Zentric...Ch. 13 - Entries for cash dividends The declaration,...Ch. 13 - Entries for cash dividends The declaration,...Ch. 13 - Entries for stock dividends Pro-Builders...Ch. 13 - Entries for stock dividends Antique Buggy...Ch. 13 - Prob. 5PEACh. 13 - Prob. 5PEBCh. 13 - Prob. 6PEACh. 13 - Prob. 6PEBCh. 13 - Prob. 7PEACh. 13 - Prob. 7PEBCh. 13 - Prob. 8PEACh. 13 - Prob. 8PEBCh. 13 - Dividends per share Imaging Inc., a developer of...Ch. 13 - Dividends per share Lightfoot Inc., a software...Ch. 13 - Entries for issuing par stock On October 31,...Ch. 13 - Entries for issuing no-par stock On February 12,...Ch. 13 - Issuing stock for assets other than cash On April...Ch. 13 - Prob. 6ECh. 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 - Entries for stock dividends Senior Life Co. is an...Ch. 13 - Prob. 11ECh. 13 - Prob. 12ECh. 13 - Selected dividend transactions, stock split...Ch. 13 - Treasury stock transactions Lava Lake Inc. bottles...Ch. 13 - Treasury stock transactions Lawn Spray Inc....Ch. 13 - Treasury stock transactions Biscayne Bay Water...Ch. 13 - Reporting paid-in capital The following accounts...Ch. 13 - Stockholders Equity section of balance sheet The...Ch. 13 - Stockholders Equity section of balance sheet...Ch. 13 - Retained earnings statement Sumter Pumps...Ch. 13 - Stockholders Equity section of balance sheet List...Ch. 13 - Prob. 22ECh. 13 - EPS Junkyard Arts, Inc., had earnings of 316,000...Ch. 13 - EPS Pacific Gas and Electric Company is a large...Ch. 13 - EPS Caterpillar Inc. and Deere Company are two...Ch. 13 - Dividends on preferred and common stock Pecan...Ch. 13 - Stock transactions for corporate expansion On...Ch. 13 - Selected stock transactions The following selected...Ch. 13 - Prob. 4PACh. 13 - Entries for selected corporate transactions...Ch. 13 - Dividends on preferred and common stock Yosemite...Ch. 13 - Prob. 2PBCh. 13 - Selected stock transactions Diamondback Welding ...Ch. 13 - Entries for selected corporate transactions Nav-Go...Ch. 13 - Prob. 5PBCh. 13 - Ethics in Action Tommy Gunn is a division manager...Ch. 13 - Prob. 2CPCh. 13 - Prob. 4CPCh. 13 - Prob. 5CPCh. 13 - Issuing stock Epstein Engineering Inc. began...
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