American College Exam HS330 Topic 1 Question 41 Discussion

Harry, Barry, and Carrie incorporated their business, HBC and received 150 shares of stock each. They entered into a cross-purchase buy-sell agreement at this time. The agreement binds their estates to sell their shares of stock to the surviving shareholders. Each shareholder also agrees to purchase one-half of the shares held by the estate of the deceased shareholder. Assume Barry dies sometime later. Which of the following statements concerning this arrangement is (are) correct?

l. When the agreement is carried out, HBC will have 300 shares of stock outstanding.

ll. Barry's estate will have additional liquidity to meet expenses and distribution equirements.