ACCT 511 Week 4 Assignment Help

ACCT 511 Week 4 Assignment Help | Liberty University | Assignment Help

Research Project 1 Prompt

            You have a client named Takem’s Appliances and Electronics, LLC, owned and operated by Tommy Takem. Takem’s is located in a rural area of Southwest Virginia, and the majority of its customers are poorer residents of the Appalachian regions of Virginia, Tennessee, Kentucky, and West Virginia. Since his business is located in a rural area where there is little competition, Tommy tends to charge about 10–20% more than most other retail outlets.

            Tommy recently came up with an idea for expanding his business. He decided to begin selling his appliances and electronics door-to-door in the above described regions. Until recently, it had been working great. He hired some great salespeople who really know how to “apply the pressure and turn up the heat.” Further, since he is providing a service to these folks by bringing the goods to their homes, he charges about 30% more than he would if the customers came to the store. Obviously, the salespeople do not mention this fact to the customers.

            Further, since many of the customers are poor, relatively uneducated and unsophisticated, and have poor credit, the vast majority of the sales are financed by Takem’s. The salespeople get the customers to sign a bill of sale, a security agreement, and a negotiable promissory note. When these documents are processed back at the office, the clerk then files a financing statement covering the goods sold to the customer in the appropriate state office. For this, Takem’s charges a 15% application fee and the maximum rate of interest allowed by law. The default rate is high, but through a combination of collections, repossessions, fees and charges, higher prices, and markups, etc., Takem’s is doing very well.

            Recently, Tommy received a letter from a disgruntled customer named Sally Walker (an elderly widow lady who lives alone in the hills of Southwest Virginia—her children and grandchildren have all moved out of the area.) She has fallen behind on her payments on her new laptop computer, and Tommy had started collection efforts. He had not yet referred it to a lawyer. The letter is very well written (which would be unexpected since Sally is not very well educated.) It indicates that her granddaughter, who recently graduated with an MS in Accounting from Liberty University Online helped her with it. It argues that the entire deal is unconscionable and therefore unenforceable. Further, it asserts that Sally has paid enough for the computer and will not be paying any more. Finally, it threatens to sue for punitive damages and write letters to the editors of various local papers throughout the region if Takem’s pushes the matter further.

            Tommy is very upset. He wants to know whether the argument in the letter has any merit. Should he take the threats in the letter seriously or should he just proceed with collections? In other words, is his business model legal? Further, he wants to know what he could do to protect himself in the future. Would setting up a financing company that he also owns and selling the notes to the financing company such that the financing company becomes a holder in due course help? Finally, he wants to know what you think about his business model—regardless of whether you conclude that it is legal, is it moral/ethical?

Research Project 2 Prompt

For this research project, you will consider a very practical question. While it mayinitially seem unrelated to the Christian worldview, as you study it, you will see that it has deep implications for the Christian businessperson and the Kingdom of God. The issue is: “which form of business organization is best for a client in a given situation and how should that entity be taxed?”

            As noted, at first blush, this very practical question may seem to have very little to do with the Christian worldview. That conclusion, however, would be in error. The Bible is a very practical book and it is concerned with every facet of our lives. There is no part of the universe over which Jesus is not Lord (See, e.g., Matthew 28:18). Accordingly, there is no part of our lives with which He is not concerned.

            Further, we as Christians should be good stewards of what God has given us, and we should be about the business of being fruitful and multiplying and taking dominion over the Earth (See, e.g., Genesis 1:28–31, 9:1 and 7). A primary means for accomplishing these goals is through just commercial activity conducted through business enterprises.

            Consider this: the Pilgrims and Puritans who settled what is now Massachusetts did so via the business organization known as a Joint Stock Company. Business enterprises have developed cures for various diseases. They have built skyscrapers that tower over the landscape like mountains and dug vast tunnels under the sea beds. Businesses have been essential in accomplishing this amazing level of dominion over the earth and helping us to be fruitful and multiply and fill the earth just as God commanded.

            Therefore, choosing the right business organization form and tax regime for a new business is very much a God-honoring endeavor. With that said, now consider the following fact pattern for this research project:

Alex, Bill, Carl, and Devon inherit from their Dad an operating organic farm in New State. The farm includes an orchard, various vegetable garden tracts, fields usually planted in grains, several trout ponds, and a poultry operation. In addition to selling the various organic products, the farm usually invites the public in each year during the fall for a corn maze, pumpkin patch, and other amusements. Alex, Bill, Carl, and Devon were never interested in farming, so their cousin, Xavier, was trained to run the farming operation by Dad and has been helping Dad do so for the past 5 years. Xavier wants to continue to do that, and Alex, Bill, Carl, and Devon are willing for him to continue to do that. Therefore, they want to form a business entity to own the farm, which Dad ran as a sole proprietorship.

Obviously, they don’t want a lot of formalities or complexities to “fool with” since they want Xavier to handle the day-to-day operations of the farm. Further, they want to minimize their taxes on the entity, they want to avoid any personal liability from the farming operations, and they want to keep the business in the family (it might be fine to sell interests in the business to their kids or to Xavier, but they would not want a stranger owning part of the business).

They have discussed the deal with Xavier, and he is very excited. In fact, he proposes that the business borrow an additional $500,000 and expand its operations to include a vineyard. There is a bank willing to offer financing, but Alex, Bill, Carl, and Devon would have to be willing to sign personal guarantees. They are still thinking it over, but they probably will proceed with Xavier’s plan for expansion.

They want you to be their accountant in New State, and therefore they come to you for advice as to which would be the best form of business organization to use for operating of the farm.

Alex, Bill, Carl, Devon, and Xavier are all Christians and want their business to be organized and operated in accordance with the Christian worldview.

In view of their situation described above, which form of business organization would you recommend? Explain fully, including the strengths and weaknesses of each form of business organization and be sure to make application to the specific facts of this situation. Assume for the purposes of this assignment that New State has typical statutes governing business organizations and that New State’s taxation of business organizations follows the federal regime.

Suggest Helpful Resources:

For an excellent article discussing the relative advantages and disadvantages of s-corporation taxation and partnership taxation, see Walter D. Schwidetzky, Integrating Subchapters K and S—Just Do It, 62 Tax Law. 749 (2009).For an excellent discussion of one of the primary benefits of s-corporation taxation for many closely held businesses, the minimization of employment taxes, see Timothy M. Todd, Multiple-Entity Planning to Reduce Self-Employment Taxes: Recent Cases Demonstrate the Pitfalls and How to Avoid Them, 13 Journal of Tax Practice & Procedure 31 (April/May 2011).

Research Project Instructions

In this course, you will be required to write 2Research Project papers. These papers will require you to research and address realistic, hypothetical legal scenarios. Each of these papers must be 7–10 pages in length (not including the title page, abstract, and bibliography), in current APA format, with 1-inch margins, double-spaced, and in 12-point Times New Roman font. Each paper must include citations to adequate sources supporting and/or illustrating your positions. Each paper must include a title page, abstract, and bibliography in current APA format. Please see the grading rubric for additional information.

These papers are exercises in the application of the material covered in the course to realistic, legal scenarios. You will be provided a prompt for each research project, and your paper should thoroughly answer the questions presented in that prompt.