An inexperienced accountant for Teahan Corporation made the following entries.

July 1 Cash ....................................................................................... 170,000

Common Stock .............................................................170,000

(Issued 20,000 shares of no-par common stock, stated value $6 per share)

Sept. 1 Common Stock ...................................................................... 36,000

Retained Earnings ..................................................................24,000

Cash...............................................................................60,000

(Purchased 4,000 shares issued on July 1 for the treasury at $15 per share)

On the basis of the explanation for each entry, prepare the entry that should have been made for

the transactions.

Additionally explain your answers in words