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Ethics in Action 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 believe 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.

BuyFind

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094
BuyFind

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094

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Chapter
Section
Chapter 13, Problem 13.2CP
Textbook Problem

Ethics in Action

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 believe 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.

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Chapter 13 Solutions

Accounting
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