Corporation: A business concern where there is a separate legal entity, and are owned by shareholders, are classified as corporation. Transfer of ownership and raising funds are easy in this form of organization. The liabilities of the stockholders to its creditors is limited up to their invested capital amount in the corporation. To Explain: the main advantages of a corporate form of business.

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Answer 1

Question

Chapter 13, Problem 13.41BP

1.

To determine

Corporation: A business concern where there is a separate legal entity, and are owned by shareholders, are classified as corporation. Transfer of ownership and raising funds are easy in this form of organization. The liabilities of the stockholders to its creditors is limited up to their invested capital amount in the corporation.

To Explain: the main advantages of a corporate form of business.

2.

To determine

To explain: whether to recommend for issuing preferred stock or common stock.

3.

To determine

To Calculate: the number of stocks to be issued by P S Comic Store.

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Organizing a corporation and issuing stock Montel and Jeremy are opening a paint store. There are no competing paint stores in the area. They must decide how to organize the business. They anticipate profits of $350 000 the first year, with the ability to sell franchises in the future. Although they have enough to start the business now as a partnership, cash flow will be an issue as they grow. They feel the corporate form of operation will be best for the long term. They seek your advice. Requirements What is the main advantage they gain by selecting a corporate form of business now? Would you recommend they initially issue preferred or common stock? Why? If they decide to issue $5 par common stock and anticipate an initial market price of $20 per share, how many share will they need to issue to raise $2,750,000?

Steve Osbourne is considering opening a business, but the major decision faced is how to organize the business. Steve anticipates generating a massive profit during the first year and that the following years should be relatively profitable. Although he has enough to start the business now as a partnership, he believes cash flow may be an issue as the company grows. Steve believes that the corporate form of operation will be his best option and have hired you as a consultant and seek your advice. Requirements: Explain the term outstanding stock. Is it true or false that corporations muse issue common stock, but may or may not decide to issue preferred stock? Is it true or false that all forms and classes of stock carry voting rights? Is it true of false that stock sold for amounts in excess of par value results in a gain reported on the income statement?

Scenario: Jay and Kay are opening a pain store to be registered as J&K Paint Shop Company Ltd. There is no other competing pain shop in the area, but their fundamental decision is how to organize the business and they anticipate a substantial profit in the first year, with the ability to sell franchises in the future. Although they have enough to start the business now as a partnership, cash flow will be an issue as they grow. They feel the corporate form of operation will be best for the long term. They seek your advice based on answers to the following questions: Questions: Which of the following characteristics is an advantage of the corporate form of business? Higher degree of government regulation The potential to raise large amounts of capital Separation of ownership and management Double taxation Which of the following statements describes the corporate characteristic termed limited liability? The liabilities of the corporation cannot be extended to the personal assets…

Answer 2

Question

Chapter 13, Problem 13.41BP

1.

To determine

Corporation: A business concern where there is a separate legal entity, and are owned by shareholders, are classified as corporation. Transfer of ownership and raising funds are easy in this form of organization. The liabilities of the stockholders to its creditors is limited up to their invested capital amount in the corporation.

To Explain: the main advantages of a corporate form of business.

2.

To determine

To explain: whether to recommend for issuing preferred stock or common stock.

3.

To determine

To Calculate: the number of stocks to be issued by P S Comic Store.

Expert Solution & Answer

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Answer 3

Question

Chapter 13, Problem 13.41BP

1.

To determine

Corporation: A business concern where there is a separate legal entity, and are owned by shareholders, are classified as corporation. Transfer of ownership and raising funds are easy in this form of organization. The liabilities of the stockholders to its creditors is limited up to their invested capital amount in the corporation.

To Explain: the main advantages of a corporate form of business.

2.

To determine

To explain: whether to recommend for issuing preferred stock or common stock.

3.

To determine

To Calculate: the number of stocks to be issued by P S Comic Store.

Expert Solution & Answer

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Answer 4

Question

Chapter 13, Problem 13.41BP

1.

To determine

Corporation: A business concern where there is a separate legal entity, and are owned by shareholders, are classified as corporation. Transfer of ownership and raising funds are easy in this form of organization. The liabilities of the stockholders to its creditors is limited up to their invested capital amount in the corporation.

To Explain: the main advantages of a corporate form of business.

2.

To determine

To explain: whether to recommend for issuing preferred stock or common stock.

3.

To determine

To Calculate: the number of stocks to be issued by P S Comic Store.

Expert Solution & Answer

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Answer 5

Chapter 13, Problem 13.41BP

1.

To determine

Corporation: A business concern where there is a separate legal entity, and are owned by shareholders, are classified as corporation. Transfer of ownership and raising funds are easy in this form of organization. The liabilities of the stockholders to its creditors is limited up to their invested capital amount in the corporation.

To Explain: the main advantages of a corporate form of business.

2.

To determine

To explain: whether to recommend for issuing preferred stock or common stock.

3.

To determine

To Calculate: the number of stocks to be issued by P S Comic Store.

Answer 6

Chapter 13, Problem 13.41BP

1.

To determine

Corporation: A business concern where there is a separate legal entity, and are owned by shareholders, are classified as corporation. Transfer of ownership and raising funds are easy in this form of organization. The liabilities of the stockholders to its creditors is limited up to their invested capital amount in the corporation.

To Explain: the main advantages of a corporate form of business.

Answer 7

Chapter 13, Problem 13.41BP

1.

To determine

Corporation: A business concern where there is a separate legal entity, and are owned by shareholders, are classified as corporation. Transfer of ownership and raising funds are easy in this form of organization. The liabilities of the stockholders to its creditors is limited up to their invested capital amount in the corporation.

To Explain: the main advantages of a corporate form of business.

Answer 8

2.

To determine

To explain: whether to recommend for issuing preferred stock or common stock.

Answer 9

2.

To determine

To explain: whether to recommend for issuing preferred stock or common stock.

Answer 10

3.

To determine

To Calculate: the number of stocks to be issued by P S Comic Store.

Answer 11

3.

To determine

To Calculate: the number of stocks to be issued by P S Comic Store.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 13 - Prob. 1QC Ch. 13 - Prob. 2QC Ch. 13 - Suppose Value Home and Garden Imports issued...Ch. 13 - Prob. 4QC Ch. 13 - Prob. 5QC Ch. 13 - Assume that a company paid 6 per share to purchase...Ch. 13 - Prob. 7QC Ch. 13 - A small stock dividend a. decreases common stock....Ch. 13 - Jackson Health Foods has 8,000 shares of 2 par...Ch. 13 - Prob. 10QC

Solution Summary: The author explains the main advantages of a corporation form of business.

To explain: whether to recommend for issuing preferred stock or common stock.

To Calculate: the number of stocks to be issued by P S Comic Store.

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Chapter 13 Solutions