Question;WK 1;DQ;DQ 1;Paid-In Capital and the Balance Sheet;From Chapter 12, Ethical Issue 12-1. Complete all parts of the case and respond;to at least two of your classmates? postings.;Stan Sewell paid $50,000 for a franchise that;entitled him to market software programs in the countries of the European;Union. Sewell intended to sell individual franchises for the major language;groups of Western Europe?German, French, English, Spanish, and Italian.;Naturally, investors considering buying a franchise from Sewell asked to see;the financial statements of his business.;Believing the value of the franchise to be $500,000;Sewell sought to capitalize his own franchise at $500,000. The law firm of St.;Charles & LaDue helped Sewell form a corporation chartered to issue 500,000;shares of common stock with par value of $1 per share. Attorneys suggested the;following chain of transactions;a. Sewell's;cousin, Bob, borrows $500,000 from a bank and purchases the franchise from;Sewell.;b. Sewell;pays the corporation $500,000 to acquire all its stock.;c. The;corporation buys the franchise from Cousin Bob.;d. Cousin;Bob repays the $500,000 loan to the bank.;In the final analysis, Cousin Bob is debt-free and;out of the picture. Sewell owns all the corporation's stock, and the;corporation owns the franchise. The corporation's balance sheet lists a;franchise acquired at a cost of $500,000. This balance sheet is Sewell's most;valuable marketing tool.;Requirements;What;is unethical about this situation?Who;can be harmed? How can they be harmed? What role does accounting play?;DQ 2;Effects on Retained Earnings and the Income Statement;Discuss cash dividends and stock;dividends. How is each recorded? When each is issued, what is the affect on;assets, liabilities and owner?s equity? Respond to at least two of your classmates?;postings.
Paper#41153 | Written in 18-Jul-2015Price : $22