I’m working on a Accounting exercise and need support.
Hello would you be able to help me out with another question?
1 hour ago
This is the main promot for discussion:
1. What accounting issue is involved?
2. How will Benson’s plan affect the return measure?
3. Is Benson’s plan ethical? Why?
4. If Benson’s plan is implemented, who would be affected, and how would they be affected?
this is what the student wrote:
The accounting issue that’s involved, the company has notes of $12.5 million and not to mention there must be an interest to that. Benson is under fire and need to get to his goal. With that much debt, Benson need to quote the selling price when issued shares.
2) In order to keep the company successful, collecting cash from selling the assets will result in paying the debt. It is a good idea to lower the assets as low as possible. Also, the Benson should produce more labels to generate more equity (cash) which is going to help lower liability (notes payable). By following this plan, it will not put the company in a situation of issuing share that are not quoted for selling price.
3) No, it’s not ethical because the custom made shares are not quotes selling price. Moreover, the rate of the asset will be inaccurate which will result in an inaccurate financial statement.
4) Benson and his controller (Susan) would be the one who would be affected. Mostly Benson because he is the one who is under fire and he’s the chief officer. Benson should report the accurate information to all the shareholders to avoid facing any fraudulent cases.
I need to reply to student’s answe.