Reference no: EM133194066

Question 1. "1For the two below situations is there any problem with the transactions and if so why? If it is possible that a problem exists, what information would you need to determine conclusively if it is a problem? Discuss thoroughly."

"(a) Smith, a director of the Sample Corporation, sells a piece of vacant land to the Sample Corporation for $500,000. The land cost him $200,000."

"(b) Jones, a shareholder of the Sample Corporation, sells a used truck to the Sample Corporation for $8,400, although the truck is worth $6,000."

Question 2. Irina wants to go sailing around New York. She rents a seat in a private sailboat for the afternoon. She feels good about her choice because when she arrived at the dock she noticed there were a dozen boats owned by "You Sail inc." and thought if they had such a large fleet it must be good. Victor was the CEO and only shareholder of "You Sail inc." Victor has never had an annual meeting of the corporation and uses one bank account for You Sail inc. and his personal expenses. During the ride Irina realized that Daniel, the captain of the boat was drunk and he capsized (flipped over) the sailboat when they were returning. Irina was seriously injured."

"A. Can Irina sue "You Sail inc.", if so how?"

"B. What if "You Sail inc." has no assets can she sue Victor, if so how?"

"C. Is there any other way Irina may be able to recover for her damages?"

Question 3. Julia is the CEO of Maki Inc., the corporation needs more money to finance a planned expansion, but Julia is not sure how she should get it. She is considering both debt securities and equity securities."

"A. What are the differences between these two things?"

"B. What are the advantages and disadvantages for them from the perspective of a potential purchaser and seller?"

"Julia finally decides to issue both common stock, and "preferred stock with a cumulative dividend of $5 per year". (100 of each kind of stock for a total of 200 shares) For the first three years the corporation only makes a small amount of money which they decide to invest back into the company and pays out nothing. Then in year four it does well and has a surplus of $2,000 and Julia wants to give all the stockholders a dividend of $10."

"C. Can she do this, why or why not?"

Question 4. Widget is a future corporation being formed in part by Alice. Widget plans on selling carpets in New York once it is formed and running. Alice has gone through all of the proper legal steps and given the final forms that need to be filed to Delilah, the attorney she hired. However, unknown to Alice or anyone associated with Widget, Delilah is a hopeless drug addict who used a large amount of drugs the morning she was supposed to mail the final forms. Delilah became so intoxicated by the drugs that she forgot that instead of mailing the forms she left them at her drug dealers apartment where they were eventually thrown away. Alice, thinking the forms are being taken care of enters into an agreement with Mark to lease a store in Time Square for 1 year. The newly appointed president of the corporation decides after running the store for one month that it is not in a good location and moves it to Queens, thereby breaking the contract. Tom wants to sue. (Reminder, explain all your answers thoroughly.)"

"A. Is there a corporation to sue?"

"B. Can he sue Widget?"

"C. Can he sue Alice?"

Question 5. Sam learned that Adams, Boone, and Chase were planning to form a corporation for the purpose of manufacturing and marketing a line of novelties to wholesale outlets. Sam had patented a self-locking gas tank cap but lacked the financial backing to market it profitably. He negotiated with Adams, Boone, and Chase, who agreed to purchase the patent rights for $5,000 in cash and 200 shares of $100 par value preferred stock in a corporation to be formed.
The corporation was formed and Sam's stock issued to him, but the corporation has refused to make the cash payment. It has also refused to declare dividends, although the business has been very profitable because of Sam's patent and has a substantial earned surplus with a large cash balance on hand. It is selling the remainder of the originally authorized issue of preferred shares, ignoring Sam's demand to purchase a proportionate number of these shares."

"A. What are Sam's rights, in relation to the $5,000 and why?"

"B. What are Sam's rights, in relation to his demand to buy a proportionate number of new shares and why?"

"C. What are Sam's rights, in relation to his dividends, if any and why?"