Alpha sounds corp., an electric guitar retailer, was organized by michele kirby, paul glenn, and gretchen northway. the charter authorized 1,200,000 shares of common stock with a par of $1.
the following transactions affecting stockholders’ equity were completed during the first year of operations:
jan. 2 issued 90,000 shares of stock at par to paul glenn for cash.
5 issued 2,800 shares of stock at par to michele kirby for promotional services provided in connection with the organization of the corporation and issued 48,800 shares of stock at par to michele kirby for cash. (record as two separate transactions.)
8 purchased land and a building from gretchen northway in exchange for stock issued at par. the building is mortgaged for $185,700 for 20 years at 6%, and there is accrued interest of $4,900 on the mortgage note at the time of the purchase. it is agreed that the land is to be priced at $59,100 and the building at $224,700 and that gretchen northway’s equity will be exchanged for stock at par. the corporation agreed to assume responsibility for paying the mortgage note and the accrued interest.
answer; i believe the correct answer is (a) purchase of treasury stock;
answer; is usually (less than) the socially optimal level of consumption;