MON LOUIE M.

FERRER MBA CASE 2-1 MAYNARD COMPANY (A) QUESTION 1 Maynard Company Balance Sheet As of June 30 June 1 ASSETS Current Assets Cash....... $ 34, 983 Accounts Receivables 21, 798 Note Receivable, Diane Maynard. 11, 700 Merchandise Inventory. 29, 835 Supplies on Hand... 5, 559 Prepaid Insurance.. 3, 150 Total Current Asset Non-Current Assets Land Building... 585, 000 Less: Accumulated Depreciation (156, 000) Equipment... 13, 260 Less: Accumulated Depreciation (5, 304) Other Non-current Assets.. Total Non-Current Assets.. Total Assets. LIABILITIES AND SHAREHOLDERS EQUITY Current Liabilities Accounts Payable... 8, 517 Bank Notes Payable... 8, 385 Taxes Payable. 5, 700 Accrued Wages Payable 1, 974 Total Current Liablities Non-current Liabilities Other non-current liabilities. 2, 451 Total Non-current Liabilities Total Liabilities.. Shareholders Equity Capital Stock. 390, 000 Retained Earnings 221, 511 Total Shareholders Equity. Total Liabilities & Shareholders Equity QUESTION 2 In the Maynard Company balance sheet most account has a significant increase from June 1 to June 30. Including these accounts are Assets: Cash, Accounts Receivables, Supplies on Hand, Equipment, _ June 30_______ $ 66, 660 26, 505 0 26, 520 6, 630 2, 826 $ 107, 025 89, 700 429, 000 7, 956 4, 857 531, 513 $ 638, 538 585, 000 (157, 950) 36, 660 (5, 928) $ 129, 141 89, 700 427, 050 30, 732 5, 265 552, 747 $ 681, 888

21, 315 29, 250 7, 224 2, 202 24, 576 2, 451 2, 451 27, 027 390, 000 229, 446 611, 511 $ 638, 538 619, 446 $ 681, 888 2, 451 62, 442 59, 991

and other Non-current assets; Liabilities: Accounts Payable, Bank Notes Payable, Taxes Payable & Accrued Wages Payable; Shareholders Equity: Retained Earnings. As we can see, Cash increased from 34, 983 of June 1 to 66, 660 of June 30. This increase is due to the increase in Accounts payable, Bank Notes Payable and other cash-generated operations of the company. Another reason is the collection of Note Receivable from Diane Maynard. Purchases of equipment and other supplies are major use of cash thats why we could observe that the current ratio of 4.32 in June 1 has fallen to 2.15 in June 30 which makes the company increased its investments. QUESTION 3 Retained Earnings has not increased by the amount of June net income of $ 19, 635 because Diane Maynard who owned all the stock of the company declared herself an $ 11, 700 dividend which she used to repay her loan from the company. Thats why the retained earnings is increased only in the amount of $ 7, 935. QUESTION 4 As of June 30, having a Shareholders Equity amounted to $ 619, 446 does not necessarily reflects that this is the worth of the company. If at this time if the company has to be liquidated, the net proceeds of the sale of assets, which is, net of liabilities can be lower than $ 619, 446. If the going concern concept has to be applied that it will continue to operate for an indefinitely long period in the future and having a typical net income of $ 19, 635, I think this will give the company a greater value. CASE 2-3 LONE PINE CAF (A) QUESTION 1 Lone Pine Caf Balance Sheet As of November 2, 2005 ASSETS Current Assets Cash Inventory Prepaid Expense Total Current Asset Non-current Asset Caf Equipment Total Non-current Asset Total Asset $ 10, 172 2, 800 1, 428 $ 14, 400 54, 600 54, 600 $ 69, 000

LIABILITIES & OWNERS EQUITY Notes Payable 21, 000 Capital, Mr. Antoine 16, 000 Capital, Mrs. Antoine 16, 000 Captial, Mrs. Landers 16, 000 48, 000 Total Liabilities & Equity $ 69, 000

QUESTION 2 Lone Pine Caf Balance Sheet As of March 30, 2006 ASSETS Current Assets Cash Inventory Prepaid Expense Total Current Asset Non-current Asset Caf Equipment Total Non-current Asset Total Asset $ 13, 542 1, 953 833 $ 16, 328 52, 155 52, 155 $ 68, 483

LIABILITIES & OWNERS EQUITY Accounts Payable 1, 583 Notes Payable 18, 900 Capital, Mr. Antoine 16, 000 Capital, Mrs. Antoine 16, 000 Captial, Mrs. Landers 16, 000 48, 000 Total Liabilities & Equity $ 68, 483 QUESTION 3 Disregarding the marital complications, I suppose that the partners would have been able to receive their proportional share of the equity determined in Question 2 if the partnership was dissolved on March 30, 2006 because on the formation of the partnership they have a contract and agreed to share the profits and loses proportionally to their contributed capital. Since they contributed equal capital, they will be receiving 1/3 of the amount balance in the equity after deducting all the companys obligations to outside party.