Question A. Will Busch recover? Explain.
Ans. Answer is in Yes. Busch can file a suit Under the Law of Torts for the Auditors Negligence and will have to prove before Courts of Law that, Auditors firms were negligent and there was a breach of duty by them, they relied upon the documents signed by them with negligence and ultimately they suffered the losses.
Question B: Will Maxwell recover? Explain.
Answer: Our answer is negative, as Maxwell being customer, must be well aware of the financial strength of the borrowers firm. Maxwell can't prove that he advanced only on the basis of Audited Accounts.Counter negligence was there and can't take the pleadings that he only relied on Audited Accounts and financed.
Meglow Corporation, a closely held manufacturer of dresses and blouses, sought a loan from Busch Factors....
Quan, Inc., a privately held corporation, is negotiating a loan for expansion purposes and the bank requires audited financial statements. Before closing the accounting records for the year ended December 31, 2019, Quan's controller prepared the following comparative financial statements for 2019 and 2018: Quan, Inc. Balance Sheets December 31, 2019 and 2018 2019 2018 Cash ........................................................ $ 550,000 $ 300,000 Investment securities (reported at market; cost, $142,000) ....................................... 156,000 0 Accounts receivable ................................. 974,000 784,000 Allowance for doubtful accounts ..................
*P21.14 Jacobsen Corporation is negotiating a loan for expansion purposes. Jacobsen's books and records have never been audited and the bank has requested that an audit be performed and that IFRS be followed. Jacobsen has prepared the following comparative financial statements for the years ended December 31, 2020 and 2019.Jacobsen CorporationStatement of Financial Positionas at December 31, 2020 and 201920202019AssetsCurrent assets Cash$163,000 $ 82,000 Accounts receivable392,000 296,000 Allowance for doubtful accounts(37,000)(18,000) Fair value—net income investments78,000 78,000 Inventory 207,000 202,000 Total current...
*P21.14 Jacobsen Corporation is negotiating a loan for expansion purposes. Jacobsen's books and records have never been audited and the bank has requested that an audit be performed and that IFRS be followed. Jacobsen has prepared the following comparative financial statements for the years ended December 31, 2020 and 2019.Jacobsen CorporationStatement of Financial Positionas at December 31, 2020 and 201920202019AssetsCurrent assets Cash$163,000 $ 82,000 Accounts receivable392,000 296,000 Allowance for doubtful accounts(37,000)(18,000) Fair value—net income investments78,000 78,000 Inventory 207,000 202,000 Total current...
Case Study Analysis: Fred Stern & Company, Inc. (Knapp): In the business world of the Roaring Twenties, the schemes and scams of flimflam artists and confidence men were legendary. The absence of a strong regulatory system at the federal level to police the securities markets—the Securities and Exchange Commission was not established until 1934—aided, if not encouraged, financial frauds of all types. In all likelihood, the majority of individuals involved in business during the 1920s were scrupulously honest. Nevertheless, the...