Homer, Raddison, and Bloke are friends who wish to incorporate an enterprise to carry on a…

Homer, Raddison, and Bloke are friends who wish to incorporate an enterprise to carry on a small-business consulting, bookkeeping, and accounting business. Homer and Raddison will each contribute $80 000 and Bloke will contribute $40,000 to the start-up costs of the venture. Homer has had some experience in running this type of business and wants a say in how the business is run. Raddison has no experience and is content to leave management decisions to the other two. Bloke has considerable experience and wants an equal voice in the corporation’s affairs. Homer and Bloke are interested in the long-term growth of the business, however Raddison is hoping to receive a regular return on his investment. What are the potential problems with the proposed venture? What share structure would you recommend to account for the contributions and interests of the three?

 

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