Santa Monica College Understanding of Corporations Discussion

Hello. I have an assignment due today where all you need to do is read the book (that I will provide) and then in 2 paragraphs, reflect from the chapter and ask 3 questions.Posted below is the assignment.

Assignment: Post comments and reflections related to the chapter here. Also, post 3 questions related to the chapter. One of the questions needs to include a journal entry and/or computation. You may also comment on the chapter opener or the ethics question in the back of each chapter. This assignment is worth 5 points. See course calendar for the due date. You will not be able to see other students’ comments until you post an entry first.

To receive full credit, you need to post comments (2 short paragraphs or more) AND 3 questions per chapter. After you have posted your initial comments, you can answer questions posted by other students.

Student Example: I believe after reading the chapter that anyone starting a small business should always start a corporation. Starting a business is a huge risk and corporations are completely separate from its owner. A corporation can be privately held meaning that the owner would be the only stockholder and that stocks are not available to the public. Public held corporations allow hundreds or even thousands of people to purchase stocks in the company. Owning a corporation will allow the company to stay as small, or grow as large as the owner desires. Besides having being taxed twice the owner doesn’t have to worry about losing their house, vehicles, or belongings if the company doesn’t survive.

I work for a construction company my uncle started on his own with simply personal tools and a pickup truck. Almost 30 years later he owns one of the most biggest construction company’s in the state of Michigan. He has began to expand his business in states such as Florida, Illinois, and also does mission work in Africa.

1) Why do most states prohibit the issuance of stock at a discount?

2) How would a company benefit from selling treasury stock for below par value if the account has a zero balance? Wouldn’t this lower retained earnings?

3) How do journal entries that involve treasury accounts with a zero balance affect retained earnings?