Penzi Company was formed on July 1, 2013.

It was authorized to issue 300,000 shares of £10 par value ordinary shares and 100,000 shares of 8% £25 par value, cumulative and non-participating preference shares. Penzi Company has a July 1–June 30 fiscal year.

The following information relates to the equity accounts of Penzi Company.

Ordinary Shares Prior to the 2015–2016 fiscal year, Penzi Company had 110,000 ordinary shares outstanding issued as follows.

1. 85,000 shares were issued for cash on July 1, 2013, at £31 per share.

2. On July 24, 2013, 5,000 shares were exchanged for a plot of land which cost the seller £70,000 in 2007 and had an estimated fair value of £220,000 on July 24, 2013.

3. 20,000 shares were issued on March 1, 2014, for £42 per share.

Preference Shares Penzi issued 40,000 preference shares at £44 per share on July 1, 2014.
Cash Dividends Penzi has followed a schedule of declaring cash dividends in December and June, with payment being made to shareholders of record in the following month. The cash dividends which have been declared since inception of the company through June 30, 2016, are shown below.

No cash dividends were declared during June 2016 due to the company’s liquidity problems.
Retained Earnings As of June 30, 2015, Penzi’s retained earnings account had a balance of £690,000. For the fiscal year ending June 30, 2016, Penzi reported net income of £40,000.
Instructions Prepare the equity section of the statement of financial position, including appropriate notes, for Penzi Company as of June 30, 2016, as it should appear in its annual report to the shareholders.

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During the 2015-2016 fiscal year, the following transactions regarding ordinary shares took place. November 30, 2015 December 15, 2015 June 20, 2016 Penzi purchased 2,000 of its own shares on the open market at 39 per share. Penzi uses the cost method for treasury shares. Penzi declared a 5% share dividend for shareholders of record on January 15, 2016, to be issued on January 31, 2016. Penzi was having a liquidity problem and could not afford a cash dividend at the time. Penzi's ordinary shares were selling at 52 per share on December 15, 2015. Penzi sold 500 of its own ordinary shares that it had purchased on November 30, 2015, for 21,000.