Overall, assets increased at the end of the month compared to the beginning by $43,350. This
results in purchasing more assets, making sales or by simply making payments or purchasing on credit.
1. Cash: There is an increase of cash as of June 30 by $31,677. This could be the result of the company making sales for cash or making purchases on credit which would explain the increase in accounts payable. Also, payments of insurance were credited from prepaid insurance resulting in no cash being removed from the account.
2. Accounts Receivable: There is an increase in accounts receivable as of June 30 by $4,707. This could
be the result of the company making sales on credit.
on hand: There is an increase in supplies on hand as of June 30 by $1,071. This could be the
result of the company having purchased more supplies during the month.
Inventory: There is a decrease
in merchandise inventory as of June 30 by $3,315.The
reason of the decrease would be that the company has made sales during the
5. Prepaid Insurance: There is a decrease in prepaid insurance as of June 30 by $324 because at the end
of the month, a payment of insurance was due resulting in decreasing the prepaid
6. Notes Receivable: The balance at the end of the month is zero because Diane Maynard paid her loan
of $11,700 resulting in cash coming in the company and notes receivable
decreasing or in this case, clearing the account.
7. Land: There is no change in land as of June 30 since land does not depreciate nor can be amortized. The value of the land can change over time depending on the market but in this case, the value does not change.
8. Building: There is a decrease in the value of the building as of June 30 by $1,950 since the
accumulated depreciation on the building increases by $1,950 over a month of use which
results in decreasing the value of the asset.
9. Equipment: There is an increase in equipment as of June 30 by $22,776. The only reason can be
explained by the company having purchased more equipment during the month since
equipment over time depreciates therefore, its value decreases.
10. Other non-current assets: There is an increase as of June 30 by $408. This could be the result of the
company holding property for sale; deferred charges; advances for
subsidiaries or other of such sort.
Liabilities: Overall, liabilities have increased as of June 30 by $35,415. The company has engaged in more
debt meaning that they have increased their amount they owe either by making purchases on
credit, borrowing money or by simply owing money to their employees for their labour.
1. Accounts Payable: There is an increase in accounts payable as of June 30 by $12,798. This could be
the results of the company purchasing on credit during the month.
2. Accrued Wages Payable: There is an increase in accrued wages payable as of June 30 by $228. This
could be the result of labour being produced during the month and the
company owing its employees’ salaries.
3. Bank Notes Payable: There is an increase in bank notes payable as of June 30 by $20,865. This could
be the result of the company borrowing for short-term during the month. This
reason of loan could be for payments that are due for the month.
4. Taxes Payable: There is an increase in taxes payable account as of June 30 by $1,524.
5. Other non-current liabilities: There is no change in this account. This could be because no payments
have been made by the company to decrease the amount owed in the
account nor any extra amounts have be added that is, any purchases
made on credit.
Shareholder’s Equity: Overall, shareholder’s equity has increased as of June 30 by $7,935.
1. Capital Stock: There is no change in this account as of June 30. This means that the company has not
issued any new stocks during the month of June.
2. Retained Earnings: There is an increase in retained earnings as of June 30 by $7,935. This increase is
the result of the difference between net income of June and dividends.
Question 3 Retained Earnings
Retained earnings do not increase by the amount of net income of June as of June 30 because not only was there net income to add on to beginning earnings but dividends were declared. Therefore, to calculate retained earnings for June 30:
Retained Earnings -June 30 = Beginning Retained Earnings -June 1 + Net Income – (Dividends)
= 221,511 + 19,635 – (11,700)
In summary, retained earnings increase by the difference between net income and dividends.
Net Income – Dividends=> 19,635-11,700 =>7,935
Where the difference between retained earnings as of June 30 and June 1:
229,446 - 221,511 = 7,935
Therefore retained earnings as of June 30 has increased by $7,935.
Question 4 The value of Maynard Company
By definition, shareholder’s equity defines the company’s net worth. In this case, Maynard Company has a total of $619, 446 shareholder’s equity meaning that the company has made that amount of profit after all dividends have been distributed.
In my opinion, after analyzing Maynard Company’s balance sheet, the company is well worth $619,446.
Although, if it was up to my decision, the company would be a bit less worth since it has liabilities but not as much as it owns shareholder equity. So, I would subtract $62,442 of liabilities from $619,446 of shareholder’s equity $557,004.