Question

Beniluz Company was formed on July 1, 2016. It was authorized to issue 1,000,000 shares of $5 par value common stock and 200,000 shares of 4% $100 par value, cumulative and nonparticipating preferred stock. Beniluz 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 2020-21 fiscal year, Beniluz Company had 304,000 shares of outstanding common stock issued as follows: 1. 220,000 shares were issued for cash on July 1, 2016, at $24 per share. 2. On August 4, 2018, 24,000 shares were exchanged for an office building and warehouse which had a book value in the seller’s book of $431,000 and had an estimated fair value of $627,000 on August 4, 2018. 3. 60,000 shares were issued on November 1, 2019, for $29 per share. During the 2020-21 fiscal year, the following transactions regarding common stock took place: 1. August 31, 2020 - Beniluz purchased 5,000 shares of its own stock on the open market at $30 per share. Beniluz uses the cost method for treasury stock. 2. December 1, 2020 - Beniluz declared a 6% stock dividend for stockholders of record on December 20, 2020, to be issued on January 15, 2021. Beniluz was having a liquidity problem and could not afford a cash dividend at the time. Beniluz ‘s common stock was selling at $28 per share on December 1, 2020. 3. June 20, 2021 - Beniluz sold 1,500 shares of its own common stock that it had purchased on August 31, 2020 for $36,000. Preferred Stock Beniluz issued 20,000 shares of preferred stock at $105 per share on October 1, 2019. 2 Cash Dividends Beniluz 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. Date Common Preferred 6/1/2018 $ 0.50 $ 2.00 12/1/2019 $ 0.50 $ 2.00 6/1/2020 $ 0.40 $ 2.00 12/1/2020 - $ 2.00 Dividend per Share No cash dividends were declared during June 2021 due to the company’s liquidity problems. Retained Earnings As of June 30, 2020, Beniluz Retained Earnings account had a balance of $824,000 and the Accumulated Other Comprehensive Income account had a credit balance of $136,000. For the fiscal year ending June 30, 2021, Beniluz reported net income of $32,000 and an unrealized loss correctly recorded as Other Comprehensive Income for the amount of $12,000. Instructions Prepare, in good form, the Stockholders’ Equity section of the Balance Sheet, including appropriate notes, for Beniluz Company as of June 30, 2021, as it should appear in its annual report to the shareholders.

Answer 1