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.