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Maynard Company (A)
Author(s):
Reece, James S.
Functional Area(s):
   Financial Accounting
Setting(s):
   For Profit
Difficulty Level: Beginner
Pages: 2
Teaching Note: Available. 
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First Page and the Assignment Questions:

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.

Assignment

  1. Prepare balance sheets as of June 1 and June 30, in proper format.
  2. How did the financial condition as of the end of June compare with that at the beginning of June.
  3. Why did retained earnings not increase by the amount of June net income?
  4. As of June 30, was Maynard Company worth the amount shown in Shareholder's Equity? Explain.