INSTITUT TEKNOLOGI BANDUNG Irvito Adhy Sanjaya 29318081 Maynard Company (A) 1) Prepare balance sheets as of June 1 and as of June 30, in proper format. MAYNARD COMPANY Balance Sheet As of June 1 Assets Current assets: Accounts receivable Cash Merchandise inventory Note receivable, Diane Maynard Prepaid insurance Supplies on hand Total current assets Noncurrent assets: Accumulated depreciation on building Accumulated depreciation on equipment Building Equipment (at cost) Land Other noncurrent assets Total noncurrent assets Total assets 21,798 34,983 29,835 11,700 3,150 5,559 107,025 (156,000) (5,304) 585,000 13,260 89,700 4,857 531,513 638,538 Liabilities and Shareholder's Equity Current liabilities: Accounts payable Accrued wages payable Bank notes payable Taxes payable Total current liabilities Noncurrent liabilities: Other noncurrent liabilities Total noncurrent liabilities 8,517 1,974 8,385 5,700 24,576 2,451 2,451 Shareholders' equity: Capital stock Retained earnings Total shareholders' equity 390,000 221,511 611,511 Total liabilities and shareholders' equity 638,538 MAYNARD COMPANY Balance Sheet As of June 30 Assets Current assets: Accounts receivable Cash Merchandise inventory Note receivable, Diane Maynard Prepaid insurance Supplies on hand Total current assets Noncurrent assets: Accumulated depreciation on building Accumulated depreciation on equipment Building Equipment (at cost) Land Other noncurrent assets Total noncurrent assets Total assets 26,505 66,660 26,520 2,826 6,630 129,141 (157,950) (5,928) 585,000 36,660 89,700 5,265 552,747 681,888 Liabilities and Shareholder's Equity Current liabilities: Accounts payable Accrued wages payable Bank notes payable Taxes payable Total current liabilities Noncurrent liabilities: Other noncurrent liabilities Total noncurrent liabilities 21,315 2,202 29,250 7,224 59,991 2,451 2,451 Shareholders' equity: Capital stock Retained earnings Total shareholders' equity 390,000 229,446 619,446 Total liabilities and shareholders' equity 681,888 2) Make comments about how the financial condition as of the end of June compared with that at the beginning of June. Current Ratio, June 1 4.35 Current Ratio, June 30 2.15 As a rule of thumb, a current ratio of at least 2 will be required to be cosidered as desirable. The current ratio may have decreased from 4.35 to 2.15 in a month, but based on the specified rule, the financial condition is still considered as acceptable. Just be careful in running the business so that moving forward it's not decreasing any further. 3) Why do retained earnings not increase by the amount of June net income? Statement of Retained Earnings Retained earnings, June 1 Additional net income, June 30 Dividend Retained earnings, June 30 221,511 19,635 241,146 (11,700) 229,446 Because there is a dividend of $11,700 occuring and Maynard used that money to repay her loan from the company. 4) As of June 30, do you feel that Maynard Company is worth the amount in Shareholder's Equity $619,446? Explain. Yes. A certain amount claimed by the business owner is what we commonly call as shareholder's equity. From the available accounts, we can see that there are 2 (two) accounts considered as shareholders' equity which are retained earnings and capital stock. Apparently, Maynard own 100% of the capital stock which results that the whole capital stock amount belongs to her. As of June 30, Maynar Company has retained earnings of $229,446 and capital stock of $390,000 (100% owned by Maynard) which if totaled will be amounted to $619,446.