Please Refer to the Following Information for Peartree Company

question 16

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 800 shares of treasury stock for $15 per share, what amounts would be shown for the number of shares issued and outstanding?

• A) 100,800 issued; 95,000 outstanding
• B) 100,000 issued; 95,800 outstanding
• C) 100,000 issued; 94,200 outstanding
• D) 100,000 issued; 5,800 outstanding

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Definitions:

Units-Of-Output Method

A depreciation method where the useful life of an asset is expressed in terms of the total number of units it can produce during its life.

Straight-Line Method

A method of calculating equal depreciation expenses for an asset over its useful life.

Straight-Line Method

This is a method of allocating the cost of an asset evenly over its useful life.

Depreciation Expense

Expense allocated for the reduction in value of tangible assets over their useful life for accounting and tax purposes.