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Question - Scruffy, Murphy is the president and principal stockholder of Scruffy's Bar & Grill, Inc. To expand, the business is applying for a $250,000 bank loan. To get the loan, Murphy is considering two options for beefing up the owners' equity of the business:

Option 1. Issue S100,000 of common stock for cash. A friend has wanted to invest in the company. This may be the right time to extend the offer.

Option 2. Transfer S100,000 of Murphy's personal land to the business, and issue common stock to Murphy. Then, after obtaining the loan, Murphy can transfer the land back to himself and zero out the common stock.

Requirements - Use the ethical decision model in Chapter 1 to answer the following questions:

1. What is the ethical issue?

2. Who are the stakeholders? What are the possible consequences to each?

3. Analyze the alternatives from the following standpoints: (a) economic, (b) legal, and (c) ethical.

4. What would you do? How would you justify your decision? How would your decision make you feel afterward.

Reference no: EM132937403

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