Hynes would receive 60 percent (patent) 120000

investors would contribute $80,000 cash for a 40 percent

interest in the company 80000
Incorporation costs 2500
purchase of equipment 85000
costs to redesign the paint spray dispenser (out-of-pocket) 25000
Component part purchases 212100
short-term loan from local bank 30000
Loan to be repaid before the end of the year 30000
interest expenses 500
Manufacturing payroll 145000
Other manufacturing costs 62000
Selling, general and administration costs 63000
Ending component parts inventory cost 15100
Sales(cash) 598500
equipment Depreciation(cost/life) 8500
patent amortization 20000
Cash dividends 5000
income tax provision made 22500
closing balance

5555 INCOME STATEMENT

REVENUE:
income from sales
total income

expenses:
operating expenses:

incorporation cost
labor and developmengt cost
manufacturing payroll
other manufacturing cost
selling , general and admin cost
cost of life-salvage value/life=depreciation component parts used
0 total expenses
EBITDA
depreciation
patent amortization
total
EBIT(operating profit)
interest paid
income tax provision
dividend paid
total
EAIT(net profit)
 ASSETS =
EQUIPMENT PATENT Component CASH

120000

80000
-2500
85000 -85000
-25000
212100 -212100
30000
-30000
-500
-145000
-62000
-63000
-15100
598500
-8500
-20000
-5000

76500 100000 197000 78400 0

assets+expense =
801000

BALANCE SHEET
ASSETS:
598500 Non-current assets:
598500 equipment 76500
Patent 100000
total non-current assets 176500

current assets:
2500 cash 78400
25000 component parts 197000
145000 total current assets 275400
62000 Total Assets 451900
63000
15100 EQUITY AND LIABILITIES:
312600 Equity 200000
285900 Other Equity / Retained Earnings 229400
8500 Total Equity 429400
20000 Liabilities
28500 Non-Current Liabilities
 257400 Unearned Revenue 0
500 Total Non -Current Liabilities 0
22500 Current Liabilities
5000 Loan 0
28000 Tax payable 22500
229400 Total Current Liabilities 22500
Total Equity and Liabilities 451900
 LIABILITIES + EQUITY
Loan Tax CAPITAL PROFIT
INCOME EXPENSE
120000

80000
2500

25000

30000
-30000
500
145000
62000
63000
15100
598500
8500
-20000
5000
22500 22500
0 22500 0 180000 598500 349100

liabilities+equity
801000
 MAYNARD company balance sheet as of June 1

ASSETS:
Current Assets:
account recievables 21798
cash 34983
merchandise inventory 29835
note recievable 11700
prepaid insurance 3150
supplies on hand 5559
Total current assets 107025

non-current assets:
accumulated depreciation on building -156000
accumulated depreciation on equipment -5304
equipment(cost) 13260
building 585000
land 89700
other non current assets 4857
Total non-current assets 531513
Total assets 638538

EQUITY AND LIABILITIES:

EQUITY:
capital stock 390000
retained earnings 221511
Total Equity 611511

current liabilities:
accounts payable 8517
accounts wages payable 1974
bank notes payable 8385
taxes payable 5700
total current liabilities 24576

non-current liabilities:
other non current liabilities 2451
total non-current liabilities 2451
Total liabilities 27027

total equity and liabilities 638538

 MAYNARD company balnce sheet as of June 30

ASSETS:
Current Assets:
account recievables 26505
cash 66660
merchandise inventory 26520
note recievable 0
prepaid insurance 2826
supplies on hand 6630
Total current assets 129141

non-current assets:
accumulated depreciation on building -157950
accumulated depreciation on equipment -5928
equipment(cost) 36660
building 585000
land 89700
other non current assets 5265
Total non-current assets 552747
Total assets 681888

EQUITY AND LIABILITIES:

EQUITY:
capital stock 390000
retained earnings 229446
Total Equity 619446

current liabilities:
accounts payable 21315
accounts wages payable 2202
bank notes payable 29250
taxes payable 7224
total current liabilities 59991

non-current liabilities:
other non current liabilities 2451
total non-current liabilities 2451
Total liabilities 62442

total equity and liabilities 681888