Penn Company was formed on July 1, 2018. It was authorized to issue 300,000 shares of $10 par value common stock and 100,000 shares of 8% $25 par value, cumulative and nonparticipating preferred stock. Penn Company has a July 1-June 30 fiscal year. The following information relates to the stockholders’ equity accounts of Penn Company. Common Stock Prior to the 2020–2021 fiscal year, Penn Company had 110,000 shares of outstanding common stock issued as follows. 1. 85,000 shares were issued for cash on July 1, 2018, at $31 per share. 2. On July 24, 2018, 5,000 shares were exchanged for a plot of land which cost the seller $70,000 in 2012 and had a fair value (based on recent land sales) of $220,000 on July 24, 2018. 3. 20,000 shares were issued on March 1, 2019, for $42 per share. During the 2020–2021 fiscal year, the following transactions regarding common stock took place. November 30, 2020 000 Penn purchased 2,000 shares of its own stock on the open market at $39 per share. Penn uses the cost method for treasury stock. December 15, 2020 Penn declared a 5% stock dividend for stockholders of record on January 15, 2021, to be issued on January 31, 2021. Penn was having a liquidity problem and could not afford a cash dividend at the time. Penn's common stock was selling at $52 per share on December 15, 2020. June 20, 2021 Penn sold 500 shares of its own common stock that it had purchased on November 30, 2020, for $21,000. Preferred Stock Penn issued 40,000 shares of preferred stock at $44 per share on July 1, 2019. Cash Dividends Penn has followed a schedule of declaring cash dividends in December and June, with payment being made to stockholders of record in the following month. The cash dividends which have been declared since inception of the company through June 30, 2021, are shown below. Declaration Date 000 CommonStock 000 Preferred Stock 12/15/19 $0.30 per share $1.00 per share 06/15/20 $0.30 per share $1.00 per share 12/15/20 — $1.00 per share No cash dividends were declared during June 2021 due to the company's liquidity problems. Retained Earnings As of June 30, 2020, Penn's retained earnings account had a balance of $690,000. For the fiscal year ending June 30, 2021, Penn reported net income of $40,000. Instructions Prepare the stockholders’ equity section of the balance sheet, including appropriate notes, for Penn Company as of June 30, 2021, as it should appear in its annual report to the shareholders.
Penn Company was formed on July 1, 2018. It was authorized to issue 300,000 shares of $10 par value common stock and 100,000 shares of 8% $25 par value, cumulative and nonparticipating
The following information relates to the
Common Stock
Prior to the 2020–2021 fiscal year, Penn Company had 110,000 shares of outstanding common stock issued as follows.
1. 85,000 shares were issued for cash on July 1, 2018, at $31 per share.
2. On July 24, 2018, 5,000 shares were exchanged for a plot of land which cost the seller $70,000 in 2012 and had a fair value (based on recent land sales) of $220,000 on July 24, 2018.
3. 20,000 shares were issued on March 1, 2019, for $42 per share.
During the 2020–2021 fiscal year, the following transactions regarding common stock took place.
| November 30, 2020 | 000 | Penn purchased 2,000 shares of its own stock on the open market at $39 per share. Penn uses the cost method for |
| December 15, 2020 | Penn declared a 5% stock dividend for stockholders of record on January 15, 2021, to be issued on January 31, 2021. Penn was having a liquidity problem and could not afford a cash dividend at the time. Penn's common stock was selling at $52 per share on December 15, 2020. | |
| June 20, 2021 | Penn sold 500 shares of its own common stock that it had purchased on November 30, 2020, for $21,000. |
Preferred Stock
Penn issued 40,000 shares of preferred stock at $44 per share on July 1, 2019.
Cash Dividends
Penn has followed a schedule of declaring cash dividends in December and June, with payment being made to stockholders of record in the following month. The cash dividends which have been declared since inception of the company through June 30, 2021, are shown below.
| Declaration Date |
000 | Common Stock |
000 | Preferred Stock |
| 12/15/19 | $0.30 per share | $1.00 per share | ||
| 06/15/20 | $0.30 per share | $1.00 per share | ||
| 12/15/20 | — | $1.00 per share |
No cash dividends were declared during June 2021 due to the company's liquidity problems.
As of June 30, 2020, Penn's retained earnings account had a balance of $690,000. For the fiscal year ending June 30, 2021, Penn reported net income of $40,000.
Instructions
Prepare the stockholders’ equity section of the
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