Please Refer to the Following Information for Peartree Company

question 53

Multiple Choice

Please refer to the following information for Peartree Company: 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:

Increase in Income Taxes Payable

An accounting term referring to a rise in the amount of income taxes a company owes to the government, yet has not paid.

Direct Method

A cash flow statement preparation method that shows the specific sources of operating cash receipts and payments.

Indirect Method

A financial reporting approach used in cash flow statements where net income is adjusted for non-cash transactions, depreciation, and changes in working capital to determine cash flow from operating activities.

Direct Method

A cash flow statement preparation approach that itemizes actual cash inflows and outflows from operating activities, as opposed to estimating them through indirect adjustments.