Ask Question, Ask an Expert

+61-413 786 465

info@mywordsolution.com

Ask Accounting Basics Expert

Assignment Topic:

Andrew, Brian, Colin, Diana and Elizabeth were the directors of the Gemsales Pty Ltd, a company engaged in the business of importing and supplying jewellery as wholesalers to local market.

The company decided that as the market was becoming more competitive it required expanding its business as it felt with raised volumes of sales it would be capable to lower its prices and be more competitive. In order to do so it received a $4 million dollar loan from the Friendly Bank Ltd. $3 million was employed to buy more stock and $1 million was employed to buy a large new warehouse and showrooms from Traders Pty Ltd.

Colin was not at the meeting that had made such decisions as he was in hospital recovering from a serious accident. Elizabeth, as was her usual custom, had not attended the meeting however signed the necessary documentation agreeing to the expansion of the business and the getting of the loan. Diana, who attended, said she did not know if she agreed and refrained from voting. Andrew and Brian both voted to go further on with the expansion and getting of the loan.

At about this time Brian has established contact with Victor, who was setting up a new business as a retailer of jewellery. Victor was looking for consistent suppliers, however said he would not deal with Gemsales Pty Ltd as he did not like Andrew, the Managing Director. Not wishing to miss out on such a lucrative business opportunity, Brian arranged to set-up his own business as a jewellery wholesaler and a contract was entered into between Victor and Brian for the supply of jewellery.

After six months, Brian resigned as a director. At the same time it was obvious the company had over-extended itself and was insolvent and could not pay the interest on its loans.

This as well became clear that Brian was a main shareholder in Traders Pty Ltd and the other directors were oblivious of this at the time of the purchase of the warehouse and showrooms. Moreover, Brian had been approaching other established customers of Gemsales Pty Ltd and had secured orders for his own business.

Advise as to the liability of ALL parties both beneath common law and the Corporations Law. In your answer you must address all the issues associating to each of the directors and their responsibilities to the corporation.

PLEASE NOTE THE FOLLOWING INSTRUCTIONS:

References should be cited in Harvard referencing style (ex: Smith 1992). The assignment should comprise a bibliography (list of references employed in the assignment). The Internet might be used for authoritative reference material provided the source, author, date of access, and site address is obviously shown in footnote format.

Additionally to sources from the Internet, at least three hard-copy sources should as well be used. Such can be either books or articles or both.  Materials from any common law jurisdiction might be employed.

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M9139

Have any Question? 


Related Questions in Accounting Basics

Question - wok n rolls statement of cash flows for october

Question - Wok N Roll's Statement of Cash Flows for October showed the following: Cash from operating activities $ 3,000 Cash for investing activities $(2,000) Cash from financing activities $ ? Net change in cash $ 5,00 ...

Question - flounder company at december 31 2017 the end of

Question - Flounder Company at December 31, 2017, the end of its first year of operations. Sales revenue $282,670 Cost of goods sold 147,300 Selling and administrative expenses 49,900 Gain on sale of plant assets 28,660 ...

Question - prepare bank reconciliation and related

Question - Prepare bank reconciliation and related entries On October 31, 2017, Lisik Company had a cash balance per books of $8,946. The bank statement on that date showed a balance of $10,155. A comparison of the state ...

Question decision making with managerial accountingdue to

Question: Decision Making with Managerial Accounting Due to varying business characteristics, the managerial accounting techniques applied in each business may differ. For example, a business in the start-up phase may re ...

Question - alpha corp had 15000 of dividends in arrears for

Question - Alpha Corp. had 15,000 of dividends in arrears for, cumulative, non-participating preferred stock as of January 1, 2018. This value of dividend in arrears was for the fiscal years 2016 & 2017. During fiscal ye ...

Questions -1 pop corporation paid 100000 cash for the net

Questions - 1. Pop Corporation paid $100,000 cash for the net assets of Son Company, which consisted of the following: Book Value Fair Value Current assets $ 40,000 $ 56,000 Plant and equipment 160,000 220,000 Liabilitie ...

Question - during 2018 liangs book store paid 485000 for

Question - During 2018, Liang's Book Store paid $485,000 for land and built a store in Cleveland, Ohio. Prior to construction, the city of Cleveland charged Liang's $1,700 for a building permit, which Liang's paid. Liang ...

Discussion internal controlsbullimagine that a coworker

Discussion: Internal Controls • Imagine that a coworker wants to circumvent an internal control to steal money from your company. Speculate on two (2) internal controls that your coworker might attempt to circumvent in o ...

Question - the san bernardino county fair hires about 150

Question - The San Bernardino County Fair hires about 150 people during fair time. Their wages range from $6.75 to $8.00. California has a state income tax of 9%. Sandy Denny earns $8.00 per hour; George Barney earns $6. ...

Question - richard starts his own business in 2016 with

Question - Richard starts his own business in 2016 with $2,000 owner's capital. In 2016, he bought 10 textbooks at $1,000 and sold 5 of them at $600. There is no other transaction during 2016. What is the cost of goods s ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Why might a bank avoid the use of interest rate swaps even

Why might a bank avoid the use of interest rate swaps, even when the institution is exposed to significant interest rate

Describe the difference between zero coupon bonds and

Describe the difference between zero coupon bonds and coupon bonds. Under what conditions will a coupon bond sell at a p

Compute the present value of an annuity of 880 per year

Compute the present value of an annuity of $ 880 per year for 16 years, given a discount rate of 6 percent per annum. As

Compute the present value of an 1150 payment made in ten

Compute the present value of an $1,150 payment made in ten years when the discount rate is 12 percent. (Do not round int

Compute the present value of an annuity of 699 per year

Compute the present value of an annuity of $ 699 per year for 19 years, given a discount rate of 6 percent per annum. As