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 purchases an additional 1,000 shares of treasury stock at $18 per share, the company will record a loss of $2 per share on the transaction.

Question

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 purchases an additional 1,000 shares of treasury stock at $18 per share, the company will record a loss of $2 per share on the transaction.

Quizplus · Accepted Answer

Since the purchase price of the additional 1,000 shares of treasury stock is lower than the original purchase price, the company will record a gain of $2 per share on the transaction instead of a loss. Therefore, the statement is false.

Please Refer to the Following Information for Peartree Company