Problem 1 Prepare journal entries (in good form) to record the treasury stock transactions and the closing entry for net income. Prepare the stockholders' equity section at 12/31/97 XYZ Corporation had the following stockholders' equity accounts on 1/1/97: common stock ($5 par) $500,000, Paid-In Capital $200,000, and Retained Earnings of $100,000. During 1997 the company had the following Treasury Stock transactions: Purchased 5,000 shares at $9 per share Sold 1,000 shares at $12 per share Sold 2,000 shares at $10 per share Sold 1,000 shares at $8 per share 12/1 XYZ uses the cost method of accounting for treasury stock and in 1997 the company had net income of $50,000