P15-12 (LO1,2,3,4) (Analysis and Classification of Equity Transactions) Penn Company was formed on July 1, 2015. 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 2017-2018 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, 2015, at $31 per share. bote 2. On July 24, 2015, 5,000 shares were exchanged for a plot of land which cost the seller $70,000 in 2009 and had an estimated fair value of $220,000 on July 24, 2015. 3. 20,000 shares were issued on March 1, 2016, for $42 per share. During the 2017-2018 fiscal year, the following transactions regarding common stock took place. November 30, 2017 December 15, 2017 June 20, 2018 Preferred Stock 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. Penn declared a 5% stock dividend for stockholders of record on January 15, 2018, to be issued on January 31, 2018. 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, 2017. Penn sold 500 shares of its own common stock that it had purchased on November 30, 2017, for $21,000. Penn issued 40,000 shares of preferred stock at $44 per share on July 1, 2016. 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 2018, are shown below. Common Stock Declaration Date 12/15/16 6/15/17 12/15/17 Preferred Stocking $0.30 per share $1.00 per share $0.30 per share $1.00 per share $1.00 per share No cash dividends were declared during June 2018 due to the company's liquidity problems. Retained Earnings As of June 30, 2017, Penn's retained earnings account had a balance of $690,000. For the fiscal year ending June 30, 2018, 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, 2018 as it should appear in its annual report to the shareholders. (CMA adapted