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 1,000 shares of treasury stock for $24 per share, the company would record a gain on sale of treasury stock for $4,000.

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 resold 1,000 shares of treasury stock for $24 per share, the company would record a gain on sale of treasury stock for $4,000.

Quizplus · Accepted Answer

Gains or losses on the sale of treasury stock are not recognized in the income statement. Instead, the transaction affects the equity section of the balance sheet. The difference between the sale price and the cost of treasury shares is recorded in paid-in capital.

Please Refer to the Following Information for Peartree Company