12/4/2020 Q.1 1 Ch 13 Take a Test Jay and John are opening an mp3 player store. There are no competing mp3 player stores in the area. They must decide how to organize the business. They anticipato profits of $550,000th business now as a partnership, cash flow will be an issue as they grow. They feel the corporate form of operation will be best for the long term. They sook your advice. Read the Requirement 1. What is the main advantage they gain by selecting a corporate form of business now? By selecting the corporate form of business now, Jay and John will A be able to transfer ownership without affecting the continuity of the company B. avoid the double taxation that affects partnerships and proprietorships. C. benefit from the ability to exercise mutual agency within a corporation Requirement 2. Would you recommend they initially issue preferred or common stock? Why? You would recommend that Jay and John initially issue stock because Requirement 3. If they decide to issue $5 par common stock and anticipate an initial market price of $25 per share, how many shares will they need to issue to raise $1,500,000? The number of shares to issue in order to raise $1,500,000 is $1,500,000