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, the company would record a loss on the 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 800 shares of treasury stock for $15 per share, the company would record a loss on the sale of treasury stock for $4,000.

Quizplus · Accepted Answer

When treasury stock is resold, the difference between its cost and the selling price is not recorded as a gain or loss but is instead treated as an adjustment to additional paid-in capital.

Please Refer to the Following Information for Peartree Company