THE CRIMSON GROUP, INC.
CONSULTING AND LEADERSHIP TRAINING IN HEALTH CARE
Home Programs Faculty Research Curriculum Center Public Resources My Account
Member Sign In
Shopping Cart  
My Account
My E-Packets
Browse Bibliography:
By Keywords:
 

By Type:
New/Updated Items
Popular Items
Cases
Background Notes
Primers and Books

By Functional Area:
Finance/Financial Management
Financial Accounting
Financial Analysis and Management
General Management
Management Accounting
Management Control Systems
Marketing
Operations Management
Organizational Behavior

By Setting:
Developing Country
For Profit
Health Policy
Healthcare Management
Nonprofit
Nonprofit Organization Management
Public Sector Management

Curriculum Center Browse Bibliography Build EPacket Pricing Structure Distribution Process Management Control in Nonprofit Organizations
 
Maynard Company (B)
Author(s):
Reece, James S.
Functional Area(s):
   Financial Accounting
Setting(s):
   For Profit
Difficulty Level: Beginner
Pages: 2
Teaching Note: Available. 
Copyright Clearance Fee:  $9.00  Sign in to find out if you are eligible for an Academic Price of $5.00 
Add Item to a new E-Packet

Add To Cart

Order an Free Inspection Copy

Back to Bibliography
First Page and the Assignment Questions:

Diane Maynard was grateful for the balance sheets that her friend prepared (see Maynard Company (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 question 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 disbursements, which is summarized in Exhibit 1. She also learned that all accounts payable were to vendors for purchase of merchandise inventory and that cost of sales was $39,345 in June.

Assignment

  1. Prepare an income statement for June in proper format. Explain the derivation of each item on this statement, including cost of sales.
  2. Explain why the change in the cash balance was greater than the net income.
  3. Explain why the following amounts are incorrect cost of sales amounts for June: (a) $14,715 and (b) $36,030, Under what circumstances would these amounts be correct cost of sales amounts?