Maynard CompanyCASE REPORT 4

1. Prepare balance sheets as of June 1 and as of June 30, in proper format.Balance Sheet as on June 1

LiabilitiesAmount ($) Assets

Amount ($)

Capital Stock 390000Land 89700Other Non-current liabilities 2451

Building 585000  

Accounts Payable 8517Less:Depreciation 248960 336040

Wages Payable 1974Equipment 13260  

Bank Notes Payable 8385Less:Depreciation 6804 6456Tax Payable 5700Merchandise Inventory 29835Retained Earnings 127051Supplies on hand 5559

    Other non-current assets 4857    Pre-paid insurance 3150    Cash 34983    Accounts Receivable 21798

   Notes receivable (Diane Maynard) 11700

  544078   544078

Balance Sheet as on June 30

Liabilities Amount ($) Assets Amount ($)

Capital Stock 390000Land 89700

Other Non-current liabilities 2451Building 585000  

Accounts Payable 21315Less:Depreciation 287680 297320

Wages Payable 2202Equipment 36660  

Bank Notes Payable 29250Less:Depreciation 7325 29335

Tax Payable 7224Merchandise Inventory 26520

Retained Earnings 98319Supplies on hand 6630

    Other non-current assets 5265

    Pre-paid insurance 2826

    Cash 66660

    Accounts Receivable 26505

  550761   550761

2. Make comments about how the financial condition as of the end of June compared with that at the beginning of June.

Comparing the balance sheets of the 1st of June with that of the 30th of June, it can be seen that there was purchase of equipment. This improved the output of the company, and hence the sales and revenues. As a result, the stock in hand decreased, the cash balance and accounts receivable increased and the taxes to be paid went up. Even so, there is a considerable amount owed to the creditors of the business.

The equipment seem to have been bought on loan as we can see an increase in the bank notes payable. The notes receivable from Diane Maynard was completely paid off by her by June 30th using the cash she took out as dividend.

3. Why do retained earnings not increase by the amount of June net income?

Even though the company benefitted from a net income of $19,635, it does not show in the retained earnings as Diane Maynard paid herself a dividend of $11,700 and the remaining difference of $36,667 seems to have been transferred to the cash account.

Remaining Cash difference = Retained Earnings (June 1) + Net income – Retained earnings (June 30) – Dividends paid to Maynard

= $127051 + $19635 - $98319 -$11700 = $36,667

4. As of June 30, do you feel that Maynard Company is worth the amount in Shareholder’s Equity, $619,446? Explain.

Shareholders equity implies the company’s net worth. Here we can see that Maynard Company has an equity share capital worth $488319 as on June 30th, therefore we can conclude that the company is not worth $619446.

THANK YOU

Prepared by,

Group A

Sukanya T.

Nivin Vinoi

Tomin Baby

Joseph Philip

Deepu Jacob