Please refer to the following information for Petra Sales Company:
• Common stock, $1.00 par, 200,000 issued, 180,000 outstanding
• Paid-in capital in excess of par: $1,600,000
• Retained earnings: $2,440,000
• Treasury stock: 20,000 shares purchased at $12 per share
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If Petra Sales sells 10,000 shares of treasury stock at $14 per share, which of the following would be TRUE?

Question

Please refer to the following information for Petra Sales Company:
• Common stock, $1.00 par, 200,000 issued, 180,000 outstanding
• Paid-in capital in excess of par: $1,600,000
• Retained earnings: $2,440,000
• Treasury stock: 20,000 shares purchased at $12 per share
- 
If Petra Sales sells 10,000 shares of treasury stock at $14 per share, which of the following would be TRUE?

Quizplus · Accepted Answer

When treasury stock is sold above its cost, the excess is credited to paid-in capital. The sale does not affect retained earnings, does not result in a gain on the income statement, and the treasury stock account balance decreases as shares are sold.

Please Refer to the Following Information for Petra Sales Company