Please Refer to the Following Information for Peartree Company

question 120

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 resold 1,000 shares of treasury stock for $24 per share, what journal entry would be required?

• A) Debit Treasury stock $24,000 and credit Cash $24,000.
• B) Debit Treasury stock $20,000, debit Paid-in capital $2,000 and credit Cash $24,000.
• C) Debit Cash $24,000 and credit Treasury stock $24,000.
• D) Debit Cash $24,000, credit Treasury stock $20,000 and credit Paid-in capital $4,000.

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Definitions:

Market Value

Market value is the estimated price at which an asset or service would trade in a competitive auction setting.

Employment Contract

A formal agreement between an employee and employer outlining job duties, compensation, and terms of employment.

Option Contract

A contract which grants the holder the right, but not the obligation, to buy or sell an asset at a set price on or before a certain date.

Counteroffer

A counteroffer is a response to an original offer, modifying some of its terms and thereby rejecting the original offer.