AFM ASSIGNMENT

MAYNARD COMPANY CASE STUDY (A)

ANSWER. 1
BALANCE SHEET AS OF JUNE 1

LIABILITES AMOUNT ASSESTS AMOUNT
Accounts payable $ 8517

Accounts receivable $ 21798
Bank notes payable $ 8385 Cash $ 34983
Accrued wages
payable
$ 1974 Note receivable $ 11700
Taxes payable $ 5700 Merchandise
Inventory
$ 29835
Capital stock $ 390000 Supplies on hand $ 5559
Retained earnings $ 221511 Land $ 89700
Other non-current
liabilities
$ 2451 Building $ 429000
Equipment $ 7956
Prepaid Insurance $ 3150
Other Noncurrent
assets
$ 4857
$ 638538 $ 638538


BALANCE SHEET AS OF JUNE 30

LIABILITES AMOUNT ASSETS AMOUNT
Accrued Wages $ 2202

Accounts receivable $ 26505

Bank Note Payable $ 29250 Building $ 427050
Other non Current
Liabilities
$ 2451 Equipment $ 30732
Retained Earnings $ 229446 Cash $ 66660
Taxes Payable $ 7224 Land $ 89700

Capital Stock $ 390000 Merchandise
inventory
$ 26520
Account Payable $ 21315 Other Non Current
Assets
$ 5265

Prepaid Insurance $ 2826

Supplies on Hand $ 6630
$ 681888 $681888







ANSWER. 2
There was an increase in cash balance and the current liabilities also
increased so its not good for the company as it will reduce the profits
of the company

ANSWER. 3
The retained earnings increased by $229,446 - $221,511 = $7,935.
Diane Maynard got a dividend of $11700 which she then used to
repay her loan

ANSWER. 4
Yes. Shareholder equity is capital in business
So Capital stock + Retained Earnings
390000+229446 = 619446








Dispensers of California Inc Case Study

Answer 1.
The profit plan can be used to analyze the assets and liabilities of the
business and forecast the future financial position. The profit plan
contain sales, cost which will serve as guide in managing all the expense
and objectives

Answer 2
ASSETS = LIABILITES + CAPITAL
1.a Patent $120,000 Common stock $120,000

1.b Cash $80,000 Common stock $80,000
2. Incorporation costs ($2500) Retained earnings ($2500)
3. Equipment purchase

Cash ($85,000)
Equipment $85,000


4. Redesign cost ($25,000) Retained earnings ($25,000)
5. Parts purchase

Inventory $212,100
Cash ($212,100)


6 Cash $30,000

Cash repaid ($30,000)

Loan interest ($500)
Bank loan
$30,000
Bank loan
($30,000)





Retained earnings ($500)

7. Cash ($145,000) Retained earnings ($145,000)

8. Cash ($62,000) Retained earnings ($62,000)
9. Cash ($63,000) Retained earnings ($63,000)
10. Inventory ($197,000) Retained earnings ($197,000)
11. Cash $598,500

Retained earnings $598,500
12. Equipment ($8,500) Retained earnings ($8,500)
13. Patent amortization ($20,000) Retained earnings ($20,000)
14. Cash ($5,000) Retained earnings ($5,000)
15. Taxes payable
$22,500
Retained earnings ($22,500)
Total Assets Total Liabilities + Capital
$270,000 $ 270,000














Answer 3.

INCOME SHEET
Sales $598,500
Components $197,000
Manufacturing payroll $145,000
Other Mfg. $62,000
Depreciation $8,500 = $412,500
Gross margin $186,500
Selling, general and administration $$63,000
Patent $20,000
Redesign costs $25,000
Incorporation costs $2,500
Operating profits $75,500
Interest $500
Profit after taxes $75,000
Tax expenses $22,500
Net income $52,500



ANSWER 4.
BALANCE SHEET
ASSETS LIABILITES
Cash $78,400

Taxes payable $22,500


Inventory $15,100

Capital stock $200,000

Current assets $93,500

Retained earnings $47,500

Equipment $76,500


Patent $100,000


Total $270,000

Total $270,000