Please refer to the following information for Peartree Company: If Peartree resold 800 shares of treasury stock for $15 per share, which of the following statements would be TRUE?

Question

Please refer to the following information for Peartree Company:  If Peartree resold 800 shares of treasury stock for $15 per share, which of the following statements would be TRUE?

Quizplus · Accepted Answer

When treasury stock is sold, it is removed from the treasury stock account and the amount received is credited to the cash account. Therefore, the Treasury stock account would go down by the number of shares sold multiplied by the sale price, which is $12,000 ($15/share x 800 shares). Option A is correct.

Paid-in capital does not change with the sale of treasury stock. Therefore, Option B is incorrect.

Retained earnings is not affected by the sale of treasury stock. Therefore, Option D is also incorrect.

Please Refer to the Following Information for Peartree Company