purchase of merchandise inventory and that cost of sales was $19.145 in June Questions Maynard Company (B)* Diane Maynard was grateful for the balance sheets that her friend prepared (see Case 2-1. Maynard Com pany (A)). In going over the numbers, she remarked "It's 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 ques tion 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 disburse ments, which is summarized in Exhibit I. She also learned that all accounts payable were to vendors for 1. Prepare an income statement for June in proper format. Explain the derivation of each item on this statement, incloding cost of sales 2. Explain why the change in the cash balance was greater than the net income 1. Explain why the following amounts are incorrect cost of sales amounts for June: 514,715 and (b) 516,030. Under what circumstances would these amounts becomect cost of the amount * a Professor Robert N. Anthony EXHIBIT 1 Cash Receipts and Disbursements Month of June Cash Receipts Cash Disbursements Cash sales 544420 Equipment purchased Credit customers 21,798 Other assets purchased Diane Maynard 11.700 Payments on accounts payable Bank loan 20,865 Cash purchases of merchandise Total receipts 598 783 Cash purchase of supplies Dividends Wages paid Utilities paid Miscellaneous payments Total disbursements Reconciliation Cash balance, June 1 5 34,983 Receipts 98,783 Subtotal 5133,766 Disbursements 67 106 Cash balance, June 30 5 66,660 $23,400 408 8,517 14,715 1.670 11.700 5,660 900 135 567 106 2 purchase of merchandise inventory and that cost of sales was $19.145 in June Questions Maynard Company (B)* Diane Maynard was grateful for the balance sheets that her friend prepared (see Case 2-1. Maynard Com pany (A)). In going over the numbers, she remarked "It's 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 ques tion 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 disburse ments, which is summarized in Exhibit I. She also learned that all accounts payable were to vendors for 1. Prepare an income statement for June in proper format. Explain the derivation of each item on this statement, incloding cost of sales 2. Explain why the change in the cash balance was greater than the net income 1. Explain why the following amounts are incorrect cost of sales amounts for June: 514,715 and (b) 516,030. Under what circumstances would these amounts becomect cost of the amount * a Professor Robert N. Anthony EXHIBIT 1 Cash Receipts and Disbursements Month of June Cash Receipts Cash Disbursements Cash sales 544420 Equipment purchased Credit customers 21,798 Other assets purchased Diane Maynard 11.700 Payments on accounts payable Bank loan 20,865 Cash purchases of merchandise Total receipts 598 783 Cash purchase of supplies Dividends Wages paid Utilities paid Miscellaneous payments Total disbursements Reconciliation Cash balance, June 1 5 34,983 Receipts 98,783 Subtotal 5133,766 Disbursements 67 106 Cash balance, June 30 5 66,660 $23,400 408 8,517 14,715 1.670 11.700 5,660 900 135 567 106 2
