INSTITUT TEKNOLOGI BANDUNG

Irvito Adhy Sanjaya

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 Liabilities and Shareholder's Equity
Current assets: Current liabilities:
Accounts receivable 21,798 Accounts payable 8,517
Cash 34,983 Accrued wages payable 1,974
Merchandise inventory 29,835 Bank notes payable 8,385
Note receivable, Diane Maynard 11,700 Taxes payable 5,700
Prepaid insurance 3,150 Total current liabilities 24,576
Supplies on hand 5,559
Total current assets 107,025 Noncurrent liabilities:
Other noncurrent liabilities 2,451
Noncurrent assets: Total noncurrent liabilities 2,451
Accumulated depreciation on building (156,000)
Accumulated depreciation on equipment (5,304) Shareholders' equity:
Building 585,000 Capital stock 390,000
Equipment (at cost) 13,260 Retained earnings 221,511
Land 89,700 Total shareholders' equity 611,511
Other noncurrent assets 4,857
Total noncurrent assets 531,513
Total assets 638,538 Total liabilities and shareholders' equity 638,538

MAYNARD COMPANY
Balance Sheet
As of June 30
Assets Liabilities and Shareholder's Equity
Current assets: Current liabilities:
Accounts receivable 26,505 Accounts payable 21,315
Cash 66,660 Accrued wages payable 2,202
Merchandise inventory 26,520 Bank notes payable 29,250
Note receivable, Diane Maynard - Taxes payable 7,224
Prepaid insurance 2,826 Total current liabilities 59,991
Supplies on hand 6,630
Total current assets 129,141 Noncurrent liabilities:
Other noncurrent liabilities 2,451
Noncurrent assets: Total noncurrent liabilities 2,451
Accumulated depreciation on building (157,950)
Accumulated depreciation on equipment (5,928) Shareholders' equity:
Building 585,000 Capital stock 390,000
Equipment (at cost) 36,660 Retained earnings 229,446
Land 89,700 Total shareholders' equity 619,446
Other noncurrent assets 5,265
Total noncurrent assets 552,747
Total assets 681,888 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

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.