ACC 201 Individual Assignment Stock Purchases (INDIANA)
Introduction and Alignment
In this discussion forum, you will explore the financial and ethical implications of stock purchases. A public corporation has outstanding common stock that is listed for sale and purchase on an organized exchange. It is important to understand the transactions that reflect the issuance of stock, the repurchase of outstanding stock, and the payment of dividends. It is also important to understand which transactions do not affect the corporation’s financial statements, and the ethical considerations of managers as good stewards of the shareholders’ investments.
Upon completion of this assignment, you should be able to:
• Explain the purpose and nature of, and the role of ethics in, managerial accounting.
• Textbook: Horngren’s Accounting
• Media: 1.4a Resource: Financial Operations of Corporations
• Media: 1.4b Resource: Earnings and Stock
1. Review Chapter 13 in Horngren’s Accounting.
2. Review the media:
a. 1.4a Resource: Financial Operations of Corporations
b. 1.4b Resource: Earnings and Stock
3. Read the following scenario:
a. Bobby’s Bagels, a publicly traded corporation whose common stock is listed on a stock exchange, just landed a contract to open 100 new stores in shopping malls across the country. The new business should triple the company’s profits. Before disclosing the new contract to the public, top managers of the company quietly bought most of Bobby’s Bagels stock for themselves. After the contract was announced, Bobby’s Bagels stock price shot up from $7 to $52.
4. Navigate to the threaded discussion below and respond to the following:
a. Where are the stock purchase transactions recorded and reported? Be careful to understand the differences between stock issuances and secondary market transactions.
b. How do you think the managers’ purchase of the stock impacted the company’s stock price?
c. What are the potential ethical implications of the transactions described in the scenario?
d. Discuss the impact of these transactions on the financial statements of the company and on the non-manager shareholders.
5. Your initial post is due by the end of the fourth day of the workshop.
6. Read and respond to at least two of your classmates’ postings, as well as to all follow-up instructor questions directed to you, by the end of the workshop.
7. Your postings should also:
a. Be well developed by providing clear answers with evidence of critical thinking.
b. Add greater depth to the discussion by introducing new ideas.
c. Provide clarification to classmates’ questions and provide insight into the discussion.