Kent Incorporated Dynamite Data Ltd

question 96

Multiple Choice

Kent incorporated Dynamite Data Ltd., which worked with small businesses in developing graphs and charts from their data for presentations to bankers, shareholders, etc. Kent lent the company $25,000 by way of a shareholder's loan and took as security computers, plotters, and printers under a General Security Agreement. An employee of the corporation, Jack, got into an argument with a customer named Roth while making a delivery. Roth was complaining that the graph was in red and not in pink as requested. It ended with Jack punching Roth, who fell onto a camera. The damage to Roth's nose and the camera totalled $35,000. Which of the following is true?

• A) The corporation is not liable for the damage caused by the action of its employee, Jack.
• B) Kent is liable for the damage to Roth and the camera if neither Jack nor the employer/corporation has sufficient funds.
• C) If the corporation went bankrupt but owed creditors (other than Roth), Kent would be in a worse position than unsecured creditors to collect proceeds realized from the sale of the corporation's assets.
• D) Even if Kent, the only shareholder, died, the corporation would not die and would still owe its outstanding debts.
• E) Roth's action against Jack is for the tort of assault.

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Definitions:

LIFO

An inventory valuation method that assumes the last items placed in inventory are the first ones sold, standing for Last In, First Out.

Periodic Inventory System

An accounting method where inventory is physically counted at specific intervals to determine the cost of goods sold.

Cost Of Goods Sold

Expenses directly related to the manufacturing of products a company sells, such as raw materials and labor costs.

Gross Profit Method

An inventory estimation method used to calculate the cost of goods sold and ending inventory, based on gross profit margins.