Question
Pharoah Company was formed on July 1, 2018. It was authorized to issue 299,300 shares of $10 par value common stock and 97,500 shares of
Pharoah Company was formed on July 1, 2018. It was authorized to issue 299,300 shares of $10 par value common stock and 97,500 shares of 8% $25 par value, cumulative and nonparticipating preferred stock. Pharoah Company has a July 1June 30 fiscal year. The following information relates to the stockholders equity accounts of Pharoah Company. Common Stock Prior to the 20202021 fiscal year, Pharoah Company had 108,000 shares of outstanding common stock issued as follows.
1. | 87,800 shares were issued for cash on July 1, 2018, at $30 per share. | |
2. | On July 24, 2018, 5,000 shares were exchanged for a plot of land which cost the seller $69,000 in 2012 and had an estimated fair value of $221,200 on July 24, 2018. | |
3. | 15,200 shares were issued on March 1, 2019, for $39 per share. |
During the 20202021 fiscal year, the following transactions regarding common stock took place.
November 30, 2020 | Pharoah purchased 2,000 shares of its own stock on the open market at $39 per share. Pharoah uses the cost method for treasury stock. | |
December 15, 2020 | Pharoah declared a 5% stock dividend for stockholders of record on January 15, 2021, to be issued on January 31, 2021. Pharoah was having a liquidity problem and could not afford a cash dividend at the time. Pharoahs common stock was selling at $51 per share on December 15, 2020. | |
June 20, 2021 | Pharoah sold 500 shares of its own common stock that it had purchased on November 30, 2020, for $21,700. |
Preferred Stock Pharoah issued 39,600 shares of preferred stock at $47 per share on July 1, 2019. Cash Dividends Pharoah 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 | Common Stock | Preferred Stock | ||
12/15/19 | $0.30 per share | $1 per share | ||
6/15/20 | $0.30 per share | $1 per share | ||
12/15/20 | $1 per share |
No cash dividends were declared during June 2021 due to the companys liquidity problems. Retained Earnings As of June 30, 2020, Pharoahs retained earnings account had a balance of $721,000. For the fiscal year ending June 30, 2021, Pharoah reported net income of $38,100. Prepare the stockholders equity section of the balance sheet, for Pharoah Company as of June 30, 2021, as it should appear in its annual report to the shareholders. (Enter account name only and do not provide descriptive information.)
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