Please Refer to the Following Information for Peartree Company

question 98

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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(Assume there are no balances in Paid-in capital from treasury stock transactions.)
If Peartree resold 800 shares of treasury stock for $15 per share, what journal entry would be required?

• A) Debit Treasury stock $16,000, debit Loss on sale $4,000 and credit Cash $20,000.
• B) Debit Treasury stock $12,000 and credit Cash $12,000.
• C) Debit Cash $12,000 and credit Treasury stock $12,000.
• D) Debit Cash $12,000, debit Retained earnings $4,000 and credit Treasury stock $16,000.

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