V Krishna Anaparthi

PhdPT-02
Accounting Assignment - 2
Maynard Company – A

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

As of June 1 As of June 30
Assets Liabilities Assets Liabilities
Current Assets Current Liabilities Current Assets Current Liabilities
Cash $34,983 Accounts Payable $8,517 Cash $66,660 Accounts Payable $21,315
Account Receivable $21,798 Accrued Wages Payable $1,974 Account Receivable $26,505 Accrued Wages Payable $2,202
Inventory $29,835 Bank Notes Payable $8,385 Inventory $26,520 Bank Notes Payable $29,250
Suppliers on hand $5,559 Taxes Payable $5,700 Suppliers on hand $6,630 Taxes Payable $7,224
Note Receivable $11,700 Total Current Liabilities $24,576 Note Receivable $0 Total Current Liabilities $59,991
Pre Paid Insurance $3,150 Pre Paid Insurance $2,826
Total Current Assets $1,07,025 Non Current Liabilities Total Current Assets $1,29,141 Non Current Liabilities
Other Non current Liabilities $2,451 Other Non current Liabilities $2,451
Non Current Assets Total Non Current Liabilities $2,451 Non Current Assets Total Non Current Liabilities $2,451
Building $5,85,000 Building $5,85,000
Depereciation on Building -$1,56,000 Total Liabilities $27,027 Depereciation on Building -$1,57,950 Total Liabilities $62,442
Equipment $13,260 Equipment $36,660
Depereciation on Equipment -$5,304 Owner's Equity Depereciation on Equipment -$5,928 Owner's Equity
Land $89,700 Capital Stock $3,90,000 Land $89,700 Capital Stock $3,90,000
Other Non current Assets $4,857 Retained Earnings $2,21,511 Other Non current Assets $5,265 Retained Earnings $2,29,446
Total Non Current Assets $5,31,513 Total Owner's Equity $6,11,511 Total Non Current Assets $5,52,747 Total Owner's Equity $6,19,446

Total Assets $6,38,538 Total Liabilities + Equity $6,38,538 Total Assets $6,81,888 Total Liabilities + Equity $6,81,888

2. Make comments about how the financial condition as of the end of June compared wih that at the beginning of June
During the course of month of June, notes receivables got cleared, which contributed to the increasing in cash component
During the course of month of June, current liabilities got increaed. Might have been due to the increase in equipment asset.

3. Why do retained earnings not increse by the amount of June net income ?
From the net income of $19,635, dividend of $11,700 got paid, resulting in retained earnings increase by $7,935 ($19,635 - $11,700).

4. As of June 30, do you feel that Maynard company is worth the amount in Shareholder's equity, $619,446? Explain
Yes. Company is worth of shareholders equity of $619,446. Which can also be expressed as total assets ($6,81,888) less all liabilities ($62,442)
 V Krishna Anaparthi
PhdPT-02
Accounting Assignment - 2
Maynard Company – B

Income Statement

Questions
1) Prepare an income statement for June in proper format. Explain the derivation of each item on
Income Statement for June
Sales $70,925.00
Cash Sales $44,420.00
on Credit Sales (26505 - 21798 + 21798) $26,505.00
Cost of Sales -$39,345.00
Cash Cost of Merchandise (14715) $14,715.00
Inventory cost of merchandise (29835-26520) $3,315.00
On Credit Merchandise Cost (21315-8517+8517) $21,315.00
Gross Profit $31,580.00
Expenses -$7,847.00
Wages Paid $5,660.00
Incurred Wages but yet to be paid (2202 - 1974) $228.00
Utilities Paid $900.00
Misc Payments $135.00
Supplies Cash Expense (1671) $1,671.00
Supplies Inventory Expense (5559-6630) -$1,071.00
Insurance Cost (3150-2826) $324.00
Cash Profit $23,733.00
Depreciation -$2,574.00
Depreciation on Building (157950-156000) $1,950.00
Depreciation on Equipment (5928-5304) $624.00
Op Proft $21,159.00
Tax Taxes incurred (7224-5700) -$1,524.00
Net Income $19,635.00
Dividend -$11,700.00
Retained Earnings $7,935.00
 V Krishna Anaparthi
PhdPT-02
Accounting Assignment - 2
2) Explain why the change in cash balance was greather than the net income
Cash balance, primarily considers the transactions involving only cash postings. While the net-
income considers the transactoins incurred in period, indepdenent of whether they are settled in
cash or not.

In the period of June, there are lot of expenses, which arent settled in cash. Hence, cash balance is
higher than the net income

3) Explain why the following amounts are incorrect cost of sales amounts for June : (a) 14715 and (b)

(a) 14715, just represents the merchandise purchased in cash. Its not necessary that the same
merchandise is related to sale happened.

In the instance, where there is no inventory balance and no merchandise is on credit (payable), then
we can refer that the cost incurred is just the cash transaction involved in purchasing merchandise in
that month.

(a) 36030, just represents the merchandise purchased in cash and on credit. Its not necessary that the
same merchandise is related to sale happened, as there can be outstanding inventory by the end of
month.

In the instance, where there is no outstanding inventory of merchandise, we can refer that the cost
incurred is summation of merchandise purcahse in cash & on credit.