Alpha Sounds Corp., an electric guitar retailer, was organized by Michele Kirby, Paul Glenn, and Gretchen Northway. The charter authorized 1,500,000 shares of common stock with a par of $1.The following transactions affecting stockholders’ equity were completed during the first year of operations:Jan.2Issued 114,000 shares of stock at par to Paul Glenn for cash. 5Issued 2,600 shares of stock at par to Michele Kirby for promotional services provided in connection with the organization of the corporation and issued 40,700 shares of stock at par to Michele Kirby for cash. (record as two separate transactions.) 8Purchased land and a building from Gretchen Northway in exchange for stock issued at par. The building is mortgaged for $182,000 for 20 years at 6%, and there is accrued interest of $5,300 on the mortgage note at the time of the purchase. It is agreed that the land is to be priced at $61,000 and the building at $223,100 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.

A mortgage is a consensus between the borrower and the lender to pay back the principal amount along…

Answered: Alpha Sounds Corp., an electric guitar…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Alpha Sounds Corp., an electric guitar retailer, was organized by Michele Kirby, Paul Glenn, and Gretchen Northway. The charter authorized 1,500,000 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 114,000 shares of stock at par to Paul Glenn for cash.
	5	Issued 2,600 shares of stock at par to Michele Kirby for promotional services provided in connection with the organization of the corporation and issued 40,700 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 $182,000 for 20 years at 6%, and there is accrued interest of $5,300 on the mortgage note at the time of the purchase. It is agreed that the land is to be priced at $61,000 and the building at $223,100 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.

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