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Thread: Balance Sheet & Cash Flow Sheet

  1. #1

    Default Balance Sheet & Cash Flow Sheet

    Hello,

    I am hoping someone would be able to answer a few questions I have.
    My dad and I own a small used car lot. Our company is set up a Partnership. Because we fix up and sell used cars, quickbooks doesnít really work for our business especially when it comes to creating our financial statements. We use excel to keep our books. However, I am having some difficulty creating our financial statements and I just want to make sure I am doing this right. I am creating them for a yearly period of time, Jan 1-Dec 31st.
    So I created our income statement. And now I am stuck on making sure I am doing the cash flow statement and the balance sheet correctly.

    • This is what our cash flow statement looks like:


    Operating Activities:
    Net Income (Amount off of our income statement) Ex) $50,000
    Plus: Beginning Inventory Ex) $10,000
    Minus: Ending Inventory Ex) $15,000
    Net Cash provided by Operating Activities: Ex) $45,000

    Financing Activities
    Minus: Initial Capitol Equity Ex) $10,000
    Minus: Owners Equity: Owners Draw Ex) $45,000
    Plus: Retained Earnings Ex) $15,000
    Net Cash provided by Financing Activities Ex) -$40,000

    Net Cash increase for period Ex) $5,000

    Cash at beginning of period Ex) $25,000
    Cash at end of period Ex) $30,000

    We did take out a business loan that we make payments on every month. I am not sure where that would go in the cash flow statement.


    • So I have read conflicting information when it comes to creating a balance sheet. Some do a three year trend and some do it just for that year. I am not sure what is the correct way to do it especially when it comes to completing our taxes.


    I created a balance sheet that uses this format with these column sub-headings: ( Note: I am not sure if I need to have both beginning and ending for each year)

    Beginning of 2018
    Ending of 2018
    Beginning of 2019
    Ending of 2019

    And then these are the row headings:

    Assets
    Current Assets:
    Cash
    Inventory
    Total Current Assets

    Total Assets

    Liabilities
    Initial Capitol Balance Equity
    Retained Earnings
    Current Net Income
    Owners Equity: Owners Draw
    Total Liabilities & Equity

    From what I understand, I then plug in all of the information from the Cash Flow statement into the balance sheet.
    Ex) End of 2018
    Assets
    Current Assets:
    Cash: $30,000
    Inventory: ????
    Total Current Assets

    Total Assets

    Liabilities

    Equity
    Plus: Initial Capitol Balance Equity: $10,000
    Plus: Retained Earnings $15,000
    Plus: Current Net Income: $50,000
    Minus: Owners Equity: Owners Draw: $45,000
    Total Liabilities & Equity= $30,000

    The above is obviously not correct. But I donít know how to fix it. I feel like I am missing something.

    The last question I have is:
    Does the amount (assets=liabilities & Equity) need to be the SAME amount for each period period i.e. Beginning of 2018. Ending Of 2018, Beginning of 2019, Ending of 2019? I have an excel spreadsheet that has a three year look back period and it has a balance sheet check formula in it. For some reason, it is telling me that all the amounts should be the exact same for each period. But that doesnít seem correct?

  2. #2
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    tallen's Avatar

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    I can't help you with the cash flow statement (we never really use them in our businesses), but the balance sheet represents a snapshot in time, not a period of time. So you add up all your assets (values determined as of the date for which you are preparing the balance sheet), and you add up all of your liabilities (again, values determined as of the date for which you are preparing the balance sheet). You could create a balance sheet spreadsheet with several columns -- one for the last time you created a balance sheet, another for the current date for which you are creating the balance sheet, and a third that shows the change between the previous balance sheet and the current balance sheet. The rows would be all of your assets, liabilities, and equities. I guess that the third column -- the difference between two balance sheet snapshots -- should probably relate to the cash flow statement for the period between those snapshot dates.

    So my suggestion would be to create your balance sheet(s) first, and *then* do the cash flow statement...

    As to your last question, a balance sheet for the end of 2018 (12/31/2018) and the beginning of 2019 (01/01/2019) should probably be the same, but the balance sheet from any one date will most likely not be the same as the balance sheet from another date a month, 3 months, a year, or 3 years later.

    BTW, I'm not sure why Quickbooks shouldn't work for your business, if you wanted it to. It is pretty flexible....

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