Answer this in detailed an explanation Transcribed Image Text: Scenario: Karen and Yanique are opening a jewellery store with no competition in the area from which they intend to operate

Answer this in detailed an explanation Transcribed Image Text: Scenario:
Karen and Yanique are opening a jewellery store with no competition in the area
from which they intend to operate their business. Their fundamental decision is
how to organize the business. They anticipate super profits the first year, with the
ability to sell franchises in the future. Although they have enough to start the
business now as a partnership, cash flow will be an issue as they grow and as
such, they feel the corporate form of operation will be best for the long term.
They seek your advice.
Requirements:
1. State three (3) of the main advantage they gain by selecting a corporate form
of business now.
2. Would you recommend they initially issue preferred or common stock? Why?
3. If the corporation when formed sets a par value for its shares low and issue
common stock for a price above par, what is this amount above par called? Can
this amount be treated as a gain, income, or profit for the corporation?
give the reason for your answer.