Please Refer to the Following Information for Petra Sales Company

question 86

Multiple Choice

Please refer to the following information for Petra Sales Company:
• Common stock, $1.00 par, 200,000 issued, 180,000 outstanding
• Paid-in capital in excess of par: $1,600,000
• Retained earnings: $2,440,000
• Treasury stock: 20,000 shares purchased at $12 per share
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If Petra Sales sells 10,000 shares of treasury stock at $14 per share, what journal entry will be made?

• A) Debit Cash $140,000 and credit Treasury stock $140,000.
• B) Debit Cash $140,000, credit Treasury stock $120,000 and credit Paid-in capital $20,000.
• C) Debit Treasury stock $140,000 and credit Cash $140,000.
• D) Debit Cash $140,000, credit Treasury stock $120,000 and credit Gain on sale of treasury stock $20,000.

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