Twin Lakes incorporated on April 1, 2018, and was authorized to issue 100,000 shares of $ 5 par value common stock and 10,000 shares of $ 8, no-par preferred stock. During the remainder of 2018, the company entered into the following transactions

1. Issued 25,000 shares of common stock in exchange for $ 500,000 in cash.

2. Issued 5,000 shares of preferred stock in exchange for $ 60,000 in cash.

3. Purchased 3,000 common shares for $ 15 per share and held them in the form of treasury stock.

4. Sold 1,000 treasury shares for $ 18 per share on the open market.

5. Issued 1,000 treasury shares executives who exercised stock options for a reduced price of $ 5 per share.

The company entered into no other transactions that affected shareholders' equity during 2018.

a. Prepare entries for each of the transactions.

b. Assume that Twin Lakes generated $ 500,000 in net income in 2018 and did not declare any dividends during 2018. Prepare the shareholders' equity section of the balance sheet as of December 31, 2018.