Diane Maynard was grateful for the balance sheets that her friend prepared [see Case 2-1, Maynard Company
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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.
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
(b) $36,030
Under what circumstances would these amounts be correct cost of sales amounts?
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Accounting Texts and Cases
ISBN: 978-1259097126
13th edition
Authors: Robert Anthony, David Hawkins, Kenneth Merchant
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