MAYNARD COMPANY (A)

Diane Maynard made the following request of a friend:

My bookkeeper has quit, and I need to see the balance sheets of my company. He has left behind a book with the numbers already entered in it. Would you be willing to prepare balance sheets for me? Also, any comments you care to make about the numbers would be appreciated. The Cash account is healthy, which is a good sign, and he has told me that the net income in June was $19,635.

The book contained a detailed record of transactions, and from it the friend was able to copy off the balances at the beginning of the month and at the end of the month as shown in Exhibit 1. Diane Maynard owned all the stock of Maynard Company.

Exhibit 1: Account Balances

	June 1	June 30
Accounts Payable	8,517	21,315
Accounts Receivable	21,798	26,505
Accrued Wages Payable	1,974	2,202
Accumulated Depreciation - Building	156,000	157,950
Accumulated Depreciation - Equipment	5,304	5,928
Bank Notes Payable	8,385	29,250
Building	585,000	585,000
Capital Stock	390,000	390,000
Cash	34,983	66,660
Equipment (at cost)	13,260	36,660
Land	89,700	89,700
Merchandise Inventory	29,835	26,520
Note Receivable, Diane Maynard	11,700	0
Other Non-current Assets	4,857	5,265
Other Non-current Liabilities	2,451	2,451
Prepaid Insurance	3,150	2,826
Retained Earnings	221,511	229,446
Supplies On Hand	5,559	6,630
Taxes Payable	5,700	7,224

Instructions: Prepare the Statement of Financial Position as of June 1 and as of June 30.

Adapted from: Anthony and Reece, Accounting Text and Cases, 9th ed

MAYNARD COMPANY (B)

Diane Maynard was grateful for the Statements of Financial Position that her friend prepared. In going over the numbers, she remarked, Its sort of surprising that Cash increased by $31,677 but Net Income was only $19,635. Why was that?

Her friend replied, A partial answer to that question is to look at an income statement for June. I think I can find the data I need to prepare one for you.

In addition to the data given in the (A) case, her friend found a record of cash receipts and disbursements, which is summarized in Exhibit 1. She also learned that all accounts payable were to vendors for purchase of merchandise inventory and that cost of sales was $39,345 for June.

Exhibit 1: Cash Receipts and Disbursements

Month of June

Cash Receipts		Cash Disbursements
Cash sales	44,420	Equipment purchased	23,400
Credit customers	21,798	Other assets purchased	408
Diane Maynard	11,700	Payments on accounts payable	8,517
Bank Loan	20,865	Cash purchases of merchandise	14,715
Total Receipts	98,783	Cash purchase of supplies	1,671
		Dividends	11,700
		Wages paid	5,660
		Utilities paid	900
		Miscellaneous payments	135
		Total Disbursements	67,106

Reconciliation:

Cash balance, June 1 $ 34,983

Receipts 98,783

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Subtotal $133,766

Disbursements 67,106

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Cash balance, June 30 $66,660

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Instructions: Prepare the Statement of Financial Performance for June.

Adapted from: Anthony & Reece, Accounting Text and Cases, 9th ed.