Mark complied with all formation requirements for incorporating his taxicab business. He is the sole shareholder in the corporation. The corporation owns two automobiles that Mark frequently uses for his own personal use. In addition, he sometimes
deposits the money he takes in during the day into his personal checking account. One day, an employee of the company, while driving one of the company vehicles, accidentally hits Peter, a pedestrian, in a crosswalk. Peter sues both Mark and the Taxi Company for $100,000. The corporate assets are only $32,000. a. Is the corporation liable for the acts of its employee? Explain. b. Will Mark be personally liable under the facts? Why? Explain.
A corporation is liable for the torts its agents commit in the course of their employment, under the doctrine of respondeat superior. Since the formalities of creating a corporation have been strictly complied with, this is a de jure corporation. However, the corporate veil may be pierced and limited liability disregarded where the business has not been conducted in a corporate manner. Here, Mark is acting as though the cars and income are for his own personal use, and the courts are likely to require that he personally pay the balance remaining after the corporate assets are used.
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Answer the following statement true (T) or false (F)
On January 1, a company issues bonds dated January 1 with a par value of $300,000. The bonds mature in 5 years. The contract rate is 9%, and interest is paid semiannually on June 30 and December 31. The market rate is 10% and the bonds are sold for $288,413. The journal entry to record the first interest payment using the effective interest method of amortization is:
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