Maynard Company (A)* Diane Maynard made the following request of a owned all the stock of Maynard Company. At the end of June, Diane Maynard paid herself an $11,700 divi- dend and used the money to repay her loan from the company 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 will- ing to prepare balance sheets for me? Also, any com- ments 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 Questions 1. Prepare balance sheets as of June 1 and as of June 30, in proper format. June was S19,635 2. Make comments about how the financial condition The book contained a detailed record of transac- tions, 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 as of the end of June compared with that at the be- ginning of June, amount of June net income? is worth the amount in Shareholder's Equity. 3. Why do retained earnings not increase by the 4. As of June 30, do you feel that Maynard Company * O Professor Robert N. Anthony. $619,446? Explain EXHIBIT 1 Account Balances June 1 June 30 Accounts payable Accounts receivable Accrued wages payable Accumulated depreciation on building Accumulated depreciation on equipment Bank notes payable Building Capital stock $ 8,517 21,798 1,974 156,000 5,304 385 585,000 390,000 34,983 13,260 89,700 29,835 11,700 4,857 21,315 26,505 2,202 157,950 5,928 29,250 585,000 390,000 66,660 36,660 89,700 26,520 Equipment (at cost) Merchandise inventory Note receivable, Diane Maynard Other noncurrent assets Other noncurrent liabilities Prepaid insurance Retained earnings Supplies on hand Taxes payable 5,265 2,826 229,446 6,630 7,224 5,559 5,700