Business plan - Income Statements and Balance Sheets (wont balance!)

Sharp101

Ok, anyone here able to help me with this?

Been working on this all day, and I just cant for the life of me make my Balance Sheets Balance..... They are pretty simple, but god dammit.


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If anyone could help out, I would really appreciate it.

supertall

I've been told that the first thing you should do when something like this won't balance is to divide the discrepancy by two, and look for that amount somewhere in your sheet.

If that doesn't work, maybe check your numbers?

Sharp101

Yeah, I've gone over this thing so many times.... Spent a good 2 or 3 hours yesterday just trying to solve this.

The one thing I've noticed is thar, Focusing on the PreStartup numbers, the amount I'm off by ($11,704.77) is very close to the sum of the Non-Asset Expenses ($11,755.00). so I'm thinking it's something to do with those numbers, but I dont know where to put them. They are listed in the Retained Earning's calculation, but they need to balance out somewhere, don't they?

EggyToast

Have you done journal entries for all of these things? That's usually the best way to make sure everything balances out. It's pretty much impossible to figure out where the issue could crop up from the finished data, at least for me.

Sharp101

What do you mean by journal entries?

What I don't understand is just simple numbers, no income or anything, just the money I have and the money I spend in Prestartup doesn't add up right....


But slapping the money I spent on non-assets into the Retained Earnings section, it balances out the Prestartup. but then that just messes up me year 1 and 2 end totals....

Bah, I don't like this stuff one bit.

EggyToast

Journal entries are the original entries you put in a ledger for each transaction. They look like this:

Equipment (Computers)    10,000
          Cash                    10,000

Accounts Receivable       5,000
Cash                       7,000
Inventory                         12,000

Debits (increases in assets, reductions in liabilities and shareholder's equity) go on the "left" and credits (decrease in assets, increases in liabilities and shareholder's equity) go on the right. They're a good starting point because they ensure that everything will balance out, as long as it's all accounted for. In other words, all of your data that you have is in its final calculation form -- we have no idea, realistically, of figuring out where it came from, where it went, or where an internal calculation threw something off. You're probably just not accounting for something, like not putting prepaid rent as an asset until it's used and then depreciating the amount used by the time the balance sheet is created, or you're capitalizing expenses that you're not supposed to capitalize. What are you selling? A service? It looks like a "gaming store" kind of thing where people are charged an hourly rate or something similar.

Are you balanced at the beginning? it looks like you are, and that you "overspent" by $50.

I don't see any interest calculations on the loan, though.

Serpent

I dont' know business, but it differs by 11,704.77 because you are not counting your 'non assett' expenditures anywhere on that balance sheet (11,755), and double counting the -50.23. The -50.23 is calculated based on all your expenditures so.........

11704.77+50.23 = 11755.

If it was done 'right' (in my opinion, not in the business way), you should have a difference of 11755 (your stuff not counted on the sheet), or should be counting non assett expenditures on the sheet.

Immolation

For "beginning of year on", how do you have all of those assets if you don't have any equity in them? If they're things that you brought to the table, they should be represented in capital.

What does the $30K under "capital invested" represent?

To me it looks like you should have:

Assets: $43K

Liabilities: $25K
Equity: $18K (This is a plug....it was how much you were worth when the whole thing started. Think of it as Net Worth.)

EggyToast

Equity is how much money is provided by shareholders (people who have bought stock). In other words, it's a corporation of some sort.

Sharp101

Yeah, this is for term project for a Entrepreneurship class, so it's not real.

The 30k is the money me a a parter 'put up' to start the business.


I've updated with what I've done, as now the PreStartup phase balances, but That just threw out my Year 1 and 2 end Balance sheets even more.

I'm completely lost as to what to do with this now.


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I want to thank you guys again for this, I've put a lot of work into this, and I know this problem is going to lose me a bunch of marks.

EggyToast

OK, first of all you spelled "Ratios" wrong in the tab (raios). In your shopping list, you combine one-time purchases (assumed) with regular purchases (food and drink), unless you're calculating your food and drink for the entire year or life of the business. Your total also appears to be pulled only from MISC.

I still think it's simply something being missed that's ending up in the wrong spot. To find it, I would have to set up the books for the entire project, though, and I have my own accounting homework to do I would suggest setting up journal entries and T-accounts for everything and see where the discrepancy comes from. The numbers probably work, but there's something that's on the wrong side, or not being counted in the appropriate area.

Rook

edit: scratch that. but I have worked out what you've done wrong (actually, I was right in the first place, you shouldn't have included the furniture and electrical as expenses, that was screwing up all your expenses. Expenses are money down the drain, the money you spent on furniture/electrical keeps it's value as assets

edit2: Ok here's your two main flaws. (well, asides from the fact that your accounts are a mess) The main reason it's really hard to track your accounts is that you don't have proper year end summaries, you really need to show when some of your expenses (e.g. supplies and food) turn into assets. You should also probably add in some depreciation on some of your assets

In years one and two you totally fuck up the loan. By the end of year one you've got loan liabilities down as CYBF Loan $7,500. But you've only listed loan payments totalling $7,620. So The loan liabilities should read as CYBF $7,380 + Personal Loan $10,000. Again at the end of the second year they should have dropped another $7,620 so the remaining total would be Personal $9,760 or however the hell you want to split it up.

Your other problem is the assets section. You don't loose the assets you had in year 1 (well, actually that's a bit of a lie, but also why your accounts are a mess) so the Furniture in year 2 should read Furniture $23,967.44 Equipment $33,804.20

edit 3 - cheat sheet if you want it. Don't forget to remove the assets from your income statement section bit

Beginning of year one

Assets
Cash -$50.23
Food Supplies $3,785.22
Supplies $100.00
Furniture $18,267.53
Equipment $21,142.47
Total Assets $43,245.00

Liabilities
CYBF Loan $15,000.00
Personal Loan $10,000.00
Total Liabilities $25,000.00

Equity
Capital Invested $30,000.00
Retained Earnings -$11,755.00
Total Equity $18,245.00

Total Liabilities and Equity $43,245.00

---

Year 1 End


Assets
Cash $15,364.44
Food Supplies $3,785.22
supplies $100.00
Furniture $21,117.49
Equipment $27,473.34
Total Assets $67,840.48

Liabilities
Loans $17380
Total Liabilities $17,380.00

Equity
Capital Invested $30,000.00
Retained Earnings $20,460.48
Total Equity $50,460.48

Total Liabilities and Equity $67,840.48

---

Year 2 End

Assets
Cash $39,887.20
Food Supplies $3,785.22
Supplies $100.00
Furniture $23,967.44
Equipment $33,804.20
Total Assets $101,544.07

Liabilities
Loans $9,760.00
Total Liabilities $9,760.00

Equity
Capital Invested $30,000.00
Retained Earnings $61,784.07
Total Equity $91,784.07

Total Liabilities and Equity $101,544.07

Sharp101

ok, I'm going to sit down in a sec and change everything you just told me, make sure it all works out.

But I'm going to say this now

THANK YOU SO FREAKING MUCH

Thanks to everyone else too, but Rook, you especially.

Rook

Oh, in the income statement section you also have to remove Supplies from the beginning of year 1. And you didn't make any gross profit at all. The food+supplies that you buy then count as assets which is why your year 1 beginning net profits are -$11,755 (just the total of your expenses) Hope that makes sense and everything works out.

variant

I understand the furniture part not being in expenses but why not the electrical bill?

Rook

variant wrote: »

I understand the furniture part not being in expenses but why not the electrical bill?

Because I am a retard and just meant equipment. (Which I think includes electrical goods if I wanted to make a whiney excuse)

variant

Ahhh I see, totally had me confused there for a sec :P