Accounting-The stockholders’ equity section of Patrick Corporation’s balance sheet

| January 30, 2017

Question
The stockholders’ equity section of Patrick Corporation’s balance sheet at December 31 is presented here:

PATRICK CORPORATION
Balance Sheet (partial)
Stockholders’ equity
Paid-in capital
Preferred stock, cumulative, 10,000 shares authorized,
6,000 shares issued and outstanding $600,000
Common stock, no par, 750,000 shares authorized,
600,000 shares issued 6,000,000
Total paid-in capital 6,600,000
Retained earnings 1,358,000
Total paid-in capital and retained earniings 7,958,000
Less: Treasury stock (4,000 common shares) (32,000 )
Total stockholders’ equity $7,926,000

From a review of the stockholders’ equity section, answer the following questions.
How many shares of common stock are outstanding?

Outstanding shares
shares

Brief Exercise 215 Patrick Corporation is authorized to issue 1,000,000 shares of $1 par value common stock. During 2014, the company has the following stock transactions.

Jan. 15 Issued 700,000 shares of stock at $7 per share.
Sept. 5 Purchased 20,000 shares of common stock for the treasury at $8 per share.
Dec. 6 Declared a $0.50 per share dividend to stockholders of record on December 20, payable January 3, 2015.

Journalize the transactions for Patrick Corporation. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts.)

Date Account Titles and Explanation Debit Credit
Jan. 15Sept. 5Dec. 6
Jan. 15Sept. 5Dec. 6
Jan. 15Sept. 5Dec. 6
1.

Expenditures that maintain the operating efficiency and expected productive life of a plant asset are generally

not recorded until they become material in amount.

expensed when incurred.

capitalized as a part of the cost of the asset.

debited to the Accumulated Depreciation account

2.

Mohling Company typically sells subscriptions on an annual basis, and publishes eight times a year. The magazine sells 45,000 subscriptions in January at $10 each. What entry is made in January to record the sale of the subscriptions?

Subscriptions Receivable 450,000
Subscription Revenue 450,000
Cash 450,000
Unearned Subscription Revenue 450,000
Subscriptions Receivable 56,250
Unearned Subscription Revenue 56,250
Prepaid Subscriptions 450,000
Cash
450,000

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