Balance Sheet Assignment Help

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A balance sheet reflects the financial position of a business for a specific period of time at a given date. It is a statement of the financial position of a business that states the assets, liabilities, and owners equity at a particular point in time. The relationship between the Balance Sheet items is expressed in this equation:

Assets = Liabilities + Equity

The balance sheet also illustrates your business's net worth. Net worth is the total assets minus total liabilities of an individual or entity. Net worth may also be referred to as book value or owner’s (stockholders) equity. In other words, net worth is the accounting value of an individual or entity if all assets were sold and liabilities were paid in full on a specific date.

Importance of preparing a Balance Sheet

1. To evaluate the financial position
2. To evaluate if the business has sufficient working capital
3. To evaluate if the business has liquidity
4. To evaluate if the business has solvency
5. To comply with the tax regulations and other laws
6. To evaluate the pace at which the assets can be converted to capital
7. To evaluate the amount of profit retained in the business
8. Helps in calculating the financial ratios
9. Help the management make decisions

Balance Sheet Items

1.Assets

Assets are the economic resources for the businesses. They are the valuables that the company owns to benefit from or are used to generate income. They are the resources of the company that has future economic value.

It can be categorized as −

Fixed Assets − Fixed assets are the purchased/constructed assets, used to earn profit not only in the current year but also in the next coming years. However, it also depends upon the life and utility of the assets. Fixed assets may be tangible or intangible. Plant & machinery, land & building, furniture, and fixture are examples of a few Fixed Assets.

Current Assets − The assets, which are easily available to discharge current liabilities of the firm called Current Assets. Cash at the bank, stock, and sundry debtors are examples of current assets.

The order in which the current assets appear in the Balance Sheet is-

1. Cash and cash equivalents: the most liquid assets, these can include Treasury bills and short-term certificates of deposit, as well as hard currency
2. Marketable securities: equity and debt securities for which there is a liquid market
3. Accounts receivable: money which customers owe the company, perhaps including an allowance for doubtful accounts (an example of a contra account), since a certain proportion of customers can be expected not to pay
4. Inventory: goods available for sale, valued at the lower of the cost or market price
5. Prepaid expenses: representing a value that has already been paid for, such as insurance, advertising contracts, or rent

Fictitious Assets − Accumulated losses and expenses, which are not actually any virtual assets called Fictitious Assets. Discount on issue of shares, Profit & Loss Account, and capitalized expenditure for time being are the main examples of fictitious assets.

Cash & Cash Equivalents − Cash balance, cash at bank, and securities which are redeemable in three months if required are called Cash & Cash equivalents.

Wasting Assets − The assets, which are reduced or exhausted in value because of their use are called Wasting Assets. For example, mines, queries, etc.

Tangible Assets − The assets, which can be touched, seen, and have volume such as cash, stock, building, etc. are called Tangible Assets.

Intangible Assets − The assets, which are valuable in nature, but cannot be seen, touched, and not have any volume such as patents, goodwill, and trademarks are important examples of intangible assets.

Note: As per Generally accepted accounting principles (GAAP) guidelines, intangible assets are listed on a balance sheet only if they are acquired assets that have a lifespan and a clearly identifiable fair market value (the probable price at which a willing buyer would buy the asset from a willing seller) that can be amortized. These are reported on the balance sheet at the original cost minus depreciation. This includes items like franchise agreements, copyrights, or patents.

2.Liability

Liability is the obligation of a business/firm/company that arises because of the past transactions/events, the settlement of which is expected to result in an outflow from the resources of the firm. It is an obligation that a company owes to outside parties, from bills it has to pay to suppliers to interest on bonds it has issued to creditors to rent, utilities, and salaries.

There are two types of Liabilities −

Current Liabilities − The liabilities which are expected to be liquidated by the end of the current year are called Current Liabilities. For example, taxes, accounts payable, wages, partial payments of long term loans, etc.

Long-term Liabilities − The liabilities which are expected to be liquidated in more than a year are called Long-term Liabilities. For example, mortgages, long-term loans, long-term bonds, pension obligations, etc.

Assets are shown on the left of the Balance Sheet whereas the liabilities are shown on the right side of the Balance Sheet.

3.Owners’ Equity

Shareholders equity is the money attributable to a business's owners, meaning its shareholders. It is also known as "net assets", since it is equivalent to the total assets of a company minus its liabilities.

Retained earnings are the net earnings a company either reinvests in the business or use to pay off debt; the rest is distributed to shareholders in the form of dividends.

The shareholder’s equity generally includes shares issued to them either through equity shares (common stock) or preference shares (preferred stock). The "common stock and "preferred stock" accounts are calculated by multiplying the par value by the number of shares issued.

Additional paid-in capital or capital surplus represents the amount shareholders have invested in excess of the "common stock" or "preferred stock" accounts, which are based on par value rather than market price.

Grouping of the items in the Balance Sheet

There may be two types of the grouping of the assets and liabilities −

1. In order of Liquidity − In this case, assets and liabilities are arranged according to their liquidity, i.e. how fast and conveniently they can be converted into cash

2.In order of Permanence − In this case, the order of the arrangement of assets and liabilities are reversed as followed in order of liquidity.

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Format of a Balance Sheet from Balance Sheet Assignment Help Experts

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1) T-shaped Format

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2) Report Format Presented by Balance Sheet Homework Help Professionals

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Working Capital

Working Capital – It is the capital of a business which is used in its day-to-day trading operation. It is calculated as the difference between the Current Assets and the Current Liabilities is called Working Capital.

Working Capital = Current assets – Current Liabilities

It shows the liquidity position of the entity.

Treatment of some Balance Sheet items

1) Closing Stock: Unsold stock at the end of the Financial year called Closing stock and valued at “Cost or market value whichever is less”.

It is shown as inventory under the assets side in the Balance Sheet.

2) Outstanding Expenses: Expenses that are due or not paid called outstanding expenses

It will appear on the liabilities side of the Balance Sheet under the current liabilities.

3) Prepaid Expenses: Expenses that are paid in advance are called Prepaid Expenses.

It will be shown in the Balance Sheet under the current assets.

4) Accrued Income: The income, which is earned during the year, but not yet received at the end of the Financial year is called Accrued Income.

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Sample fo Balance Sheet Assignment Help Solved by The Experts

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Part 1: Adjusted Trial Balance

Barb has found the following adjusting entries that need to be made to the Unadjusted Trial Balance. Prepare the Adjusting Journal Entries, and enter them into the Adjusting Entries column of the Adjusted Trial Balance worksheet. Denote the entry number of each adjustment in the entry # column. Note: Some items won’t require an adjusting entry. Read each item carefully.

1. Business insurance was purchased in November for $12,000, which covers a 12-month period. An entry needs to be made between prepaid and insurance expenses. This entry has been done for you and should be used as an example of how the rest of the entries should be completed.
   
2. Depreciation needs to be calculated for all of the fixed-asset accounts.
   
   • Computer equipment, computer software, and furniture and fixtures will be depreciated using the straight-line method over 60 months.
     
   • Machinery will be depreciated over 84 months using the straight-line method of accounting.
     
3. An entry was made incorrectly recording the Note Payable interest and principal payments to the Other Accrued Liability account. The entry should have been made to Interest Expense and the Notes Payable accounts. The loan has a monthly payment of $1001.61. The shop has paid $2,439 in interest and $5,565 in principal over the past eight months.
   
   1. The note was used to purchase a customer list. The asset will have a life of 10 years, and it should be amortized evenly over the 10-year period. You’ll need to record the amortization.
      
   2. The loan has a monthly payment of $1,001.61. The short-term portion of the loan (the next 12 months of payments) needs to be reclassed from account 400–Note Payable to account 335–Short-Term Portion of Notes Payable.
      
   3. As stated above, the original interest expense of $2,439 was incorrectly recorded in the Other Accrued Liabilities account number 320 for the eight-month period. You’ll need to make an adjusting journal entry to correct this. You’ll need to reclassify the error to the interest expense account.
      
   4. The principal amount of $5,565 was also incorrectly recorded in Other Accrued Liabilities account number 320. You’ll need to make an adjusting entry, moving this from Accrued Other and reducing the Long-Term Note Payable account.
      
4. Several late payables were received but not recorded. These payables were for clothing and accessories discounted after the season and will be sold next year. The total late payable amount is $6,998.
   
5. Inventory is valued correctly at the lower of cost or market.
   
6. Since it’s the shop’s first year, it could be hard to estimate what the balance in the allowance for doubtful accounts should be. But based on the Bernard’s New York store and the similarities of both, Mrs. Bernard estimated the allowance should be 5 percent of Accounts Receivable.
   
7. Mr. and Mrs. Bernard collect their salary throughout the year. They’re paid one week in arrears. Their gross payroll for a week is $3,942, and the employer portion of tax associated with the accrual is 15 percent. You’ll need to make an adjusting entry to record the one week of salary and tax expense.
   
8. Rent is $3,000 per month and is prepaid on the first day of the month.
   
9. Utilities this time of year are low and run $275 a month. Services are billed for the previous month at the beginning of the next month. For example, June’s utility invoice would be sent at the beginning of July. You’ll need to adjust for this.
   
10. The shop’s CPA has advised the Bernards that their estimated tax liability for the year will be $51,924. They’ve made payments through the end of May of $45,434. The remaining amount will need to be accrued.

Total the adjusting entries to be sure they zero out. Your next step will be to combine the Unadjusted Trial Balances and the Adjusting Entries to calculate the Adjusted Trial Balance.

Next, divide the accounts into either Net Income or Balance Sheet accounts and enter into the appropriate columns. Hint: The net balance of both the Income and Balance Sheets accounts will be $158,977.

Part 2: Aggregation of Income Account

Aggregate the Net Income account balances. You can use Project, Part 2, to complete this task. This should be similar to that shown on page 184 in your textbook. Remember, the format is slightly different.

Part 3: Income Statement/Vertical Analysis

Prepare an Income Statement and Vertical Analysis for the eight-month period ending June 30. This should be similar to that shown on page 216 in your textbook.

Part 4: Aggregated Balance Sheet

Aggregate the Balance Sheet Accounts. This should be similar to that shown on pages 198 and 199 in your textbook. Again, remember the format is slightly different.

Part 5: Balance Sheet and Key Ratios

Prepare the Balance Sheet for the eight-month period ending June 30. Also, you need to define and calculate the current ratio, quick ratio, and debt-to-equity ratio for the Mile High Ski and Snowboard Shop.