Please Refer to the Following Information for Peartree Company

question 111

Multiple Choice

Please refer to the following information for Peartree Company:
• Common stock, $1.00 par, 100,000 issued, 95,000 outstanding
• Paid-in capital in excess of par: $2,150,000
• Retained earnings: $910,000
• Treasury stock: 5,000 shares purchased at $20 per share
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If Peartree purchases an additional 1,000 shares of treasury stock at $18 per share, which of the following statements would be TRUE?

• A) The Treasury stock account would go down by $18,000.
• B) The Paid-in capital account would not be affected.
• C) The Retained earnings account would go down by $2,000.
• D) The Paid-in capital account would go down by $2,000.

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Definitions:

Hypnotizes

The act of inducing a trance-like state in which a person is more open to suggestion, typically for therapeutic purposes.

Schema

A cognitive framework or concept that helps organize and interpret information, based on experiences, to understand the world.

Vivid

Producing powerful feelings or strong, clear images in the mind.

Schema-Based Memory

Memory model suggesting that what we remember is influenced by our knowledge structure or schemas—frameworks that help us organize and interpret information.