Case 2-1Maynard Company (A)*Diane Maynard made the following request of afriend:owned all the stock of Maynard Company. At the endof June, Diane Maynard paid herself an $11,700 divi-dend and used the money to repay her loan from theMy bookkeeper has quit, and I need to see the balancesheets of my company. He has left behind a book withthe 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 beappreciated. The Cash account is hcalthy, which is agood sign, and he has told me that the net inconse inJune was S19,635.company.QuestionsThe book contained a detailed record of transac-tions, and from it the friend was able to copy off thebalanoes at the beginning of the month and at the endof the month as shown in Exhibit 1. Diane Maynard3. Why do retained earnings not increase by theamount of June net income?4. As of June 30, do you feel that Maynard Companyis worth the amount in Shareholder's Equity.$619,446? Explain.•O Professor Robert N. Anthony.EXHIBIT 1 Account BalancesJune 1June 30Accounts payableAccounts receivableAccrued wages payableAccumulated depreciation on buildingAccumulated depreciation on equipmentBank notes payableBuildingCapital stockCashEquipment (at cost)LandMerchandise inventoryNote receivable, Diane MaynardOther noncurrent assetsS 8,51721,7981,974156,0005,3048,385585,000390,00034,98313,26089,70029,83511,7004,8572,4513,150221,5115,5595,700$ 21,31526,5052,202157,9505,92829,250585,000390,00066,66036,66089,70026,520Other noncurrent liabilitiesPrepaid insuranceRetained earningsSupplies on handTaxes payable5,2652,4512,826229,4466,6307,224

Name: Case 2-1Maynard Company (A)*Diane Maynard made the following request
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Description: Case 2-1Maynard Company (A)*Diane Maynard made the following request of afriend:owned all the stock of Maynard Company. At the endof June, Diane Maynard paid herself an $11,700 divi-dend and used the money to repay her loan from theMy bookkeeper has

Retained earning- Retained Earnings are the accumulated fraction of a company’s proceeds that are…

Business

Accounting

Case 2-1 Maynard Company (A)* Diane Maynard made the following request of a friend: owned all the stock of Maynard Compuny. At the end of June, Diane Maynard paid herself an SI1,700 divi- dend and used the money to repay her loan from the 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 inconse in June was $19,635. company. Questions

Case 2-1 Maynard Company (A)* Diane Maynard made the following request of a friend: owned all the stock of Maynard Compuny. At the end of June, Diane Maynard paid herself an SI1,700 divi- dend and used the money to repay her loan from the 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 inconse in June was $19,635. company. Questions

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Financial Transaction Analysis

The transaction analysis is done with the help of the accounting equation. The basic accounting equation is alternatively known as the balance sheet equation is based on the double-entry system which says that for each transaction happening in a business, at least two accounts should be affected I.e. both the debit side and the credit side should be equal. The Accounting Equation is

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Question

Case 2-1
Maynard Company (A)*
Diane Maynard made the following request of a
friend:
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
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 hcalthy, which is a
good sign, and he has told me that the net inconse in
June was S19,635.
company.
Questions
The book contained a detailed record of transac-
tions, and from it the friend was able to copy off the
balanoes at the beginning of the month and at the end
of the month as shown in Exhibit 1. Diane Maynard
3. Why do retained earnings not increase by the
amount of June net income?
4. As of June 30, do you feel that Maynard Company
is worth the amount in Shareholder's Equity.
$619,446? Explain.
•O Professor Robert N. Anthony.
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
Cash
Equipment (at cost)
Land
Merchandise inventory
Note receivable, Diane Maynard
Other noncurrent assets
S 8,517
21,798
1,974
156,000
5,304
8,385
585,000
390,000
34,983
13,260
89,700
29,835
11,700
4,857
2,451
3,150
221,511
5,559
5,700
$ 21,315
26,505
2,202
157,950
5,928
29,250
585,000
390,000
66,660
36,660
89,700
26,520
Other noncurrent liabilities
Prepaid insurance
Retained earnings
Supplies on hand
Taxes payable
5,265
2,451
2,826
229,446
6,630
7,224

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