Please Refer to the Following Information for Peartree Company

question 73

Multiple Choice

Please refer to the following information for Peartree Company: If Peartree resold 800 shares of treasury stock for $15 per share, which of the following statements would be TRUE?

• A)The total equity of the company would be unchanged.
• B)The total equity of the company would go up by $12,000.
• C)The total equity of the company would go down by $12,000.
• D)The total equity of the company would go down by $4,000.

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Definitions:

Period-End Adjusting Entry

Journal entries made at the end of an accounting period to update the balances of certain accounts and ensure compliance with the accrual basis of accounting.

Revenue Recognition Rules

Accounting principles that determine when and how revenue is recognized in the financial statements.

Gross Method

An accounting practice where purchase discounts are ignored unless they are actually taken by the purchaser.

Period-End Adjusting Entry

Journal entries made at the end of an accounting period to update accounts for accruals and deferrals that have not been recorded.