pening a comic bookstore to be registered as E&B Comic Bookstore Co. There is no other competing
Ben and Eric are opening a comic bookstore to be registered as E&B Comic Bookstore Co. There is no other competing
comic bookstore in the area. 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
long term. They seek your advice.
Requirements
1. What is the main advantage they gain by selecting a corporate form of business now?
2. Distinguish between par value and issue price.
3. If they decide to issue $1 par common stock and anticipate an initial market price of $80 per share, how many shares
will they need to issue to raise $4,000,000?
4. The owners are desirous of comparing serval financial transactions and possible outcomes to assist in guiding their
decision-making process. They assume that the company will be formed on January 1, 2020. In addition, E&B Comic
Bookstore Company’s charter will authorize 1,200,000 shares of common stock (to be divided into two classes (700,000
shares class A -voting rights and 500,000 shares class B -nonvoting rights) and 400,000, $X par value (see info below),
5% cumulative
journal entries and statement of owner’s equity based on the following information which is grouped according to your first
name initial. (Hint!!!! Example first Manuel will use the initial M and that person should only use the info presented
in line with the heading with their first name initial. You are not allowed to use info associated other initials other
than that of your own as this will result in the forfeiture of the grade.)
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