On January 5, 2020, A Corporation received a charter granting the right to issue 5,000 shares of $100 par value, 8% cumulative and nonparticipating preferred stock, and 50,000 shares of $10 par value common stock. It then completed these transactions.

Jan. 11 Issued 20,000 shares of common stock at $16 per share.

Feb. 1 Issued to Sanchez Corp. 4,000 shares of preferred stock for the following assets: equipment with a fair value of $50,000; a factory building with a fair value of $160,000; and land with an appraised value of $270,000.

July 29 Purchased 1,800 shares of common stock at $17 per share. (Use cost method.) Aug. 10 Sold the 1,800 treasury shares at $14 per share. Dec. 31 Declared a $0.25 per share cash dividend on the common stock and declared the pre ferred dividend. Dec. 31 Closed the Income Summary account. There was a $175,700 net income.

a. Record the journal entries for the transactions listed above.

b. Prepare the stockholders equity section of Phelps Corporations balance sheet as of December 31, 2020.

Sometimes I did July 29 and Aug 10 journal entry wrong.

even though for July 29, the journal entry is

debit: treasury stock 30600

credit: cash 30600

I have a temptation to relate July 29 treasury stock (price $17) with Jan 11 Common stock price (price $16) and get loss of $1 per share

then I did like this: debit: treasury stock 16*1800=28800

paid in capital - treasury stock 1800

credit: cash 17*1800=30600 1. why in this journal entry I cannot record paid in capital -treasury stock as the difference? Is every time purchase treasury stock won't use paid in capital -treasury stock this account ?

For journal entry for Aug 10th, It is like this: debit: cash 25200

retained earnings 5400

Credit: treasury stock 30600

I have temptation do journal entry like this : debit: cash 25200

paid in capital-treausry stock 5400

Credit treasury stock 30600

2..why cannot paid in capital -treausry stock this account here? is this because paid in capital -treasury doesn't have any balance in the credit or other reasons? why this journal entry need paid in capital -treasury stock account but last journal in July 29th entry doesn't need?

3. For last one, dec 31st, journal entry, journal entry I think it should like this:

dr: retained earning 175700

cr: net income 175700

then: dr: income summary 175700

Cr: retained earning 175700

I sometimes have temptation to do opposite like dr: net income

Cr: retained earnings

I thought it was close account, thus, I need to reverse it. but I was wrong, could you please explain this three questions in details, thanks.