Ayayai Corporation had the following stockholders’ equity accounts on January 1, 2020: Common Stock ($4 par) $400,000, Paid-in Capital in Excess of Par—Common Stock $175,000, and Retained Earnings $100,000. In 2020, the company had the following treasury stock transactions.

Mar.	1		Purchased 5,500 shares at $8 per share.
June	1		Sold 1,000 shares at $12 per share.
Sept.	1		Sold 1,000 shares at $10 per share.
Dec.	1		Sold 1,000 shares at $6 per share.

Ayayai Corporation uses the cost method of accounting for treasury stock. In 2020, the company reported a net income of $25,000.

  

Journalize the treasury stock transactions, and prepare the closing entry at December 31, 2020, for net income. Date Account Titles and Explanation Debit Credit Dec. 1