Balance sheet not balancing - having sleepless nights over it!

[unbalanced_42]

I hope someone can help - i'm really confused with the balance sheet. Below is a copy of our profit and loss and balance sheet. The profit and loss bit seems really straight forward, but the balance sheet (which should also be straight forward) is giving me sleepless nights!!

In a nut shell, we brought in £11,981 and (as it's our first accounts) have some tough set up costs resulting in a -£3761 loss.

Our tangible assets (plant and machinery) is £2903, with a £567 depreciation for the year, leaving £2336 in the tangible assets field.

There's no debtors or creditors (that i know of) and just £2 shares called up (2 shares at £1 each).

And it doesn't balance! I'm sure there's a simple mistake here and i really would ask for any help on this problem - Thanks!


PROFIT AND LOSS

TURNOVER 11,981

Cost of sales (1,524)

GROSS PROFIT 10,457

Administrative expenses (14,127)

OPERATING PROFIT (3,671)

Interest receivable and similar income 0

(3,761)

Interest payable and similar charges 0

PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION
(3,761)

Tax on profit on ordinary activities 0

PROFIT FOR THE FINANCIAL YEAR AFTER TAXATION
(3,761)


BALANCE SHEET

FIXED ASSETS
Tangible assets 2,336

CURRENT ASSETS
Debtors 0
Cash at Bank 0

0
CREDITORS
Amounts falling due within 1 year 0

NET CURRENT (LIABILITIES)/ASSETS 0

TOTAL ASSETS LESS CURRENT LIABILITIES 2,336

CAPITAL AND RESERVES
Called up share capital 2
Profit and loss account (3,761)

SHAREHOLDERS’ FUNDS (3,763)

[SirOracle]

Doesn't seem too unusual for a first year balance sheet.
I would suggest that you have a chat with your accountant who drew up the balance sheet. You will be paying him/her and that person will be able to explain any points which you are unsure of. This is part of an accountants job.

[unbalanced_42]

Hi SirOracle,
Thanks for responding. Unfortunatley we can't afford an accountant and i've put the accounts together myself - using many hours of youtube tutorials and web searches.
Problem is - as i understand it - the shareholders funds should be equal to the profit for the financial year after taxation and should be worked out by using the total assets less current liabilities figure...which it doesn't. :(
Any help to understand my mistake/problem would be gratefully recieved.

[twix123]

How was the initial set-up funded? Do you have an overdraft or loan from your bank or from the directors, as you seem to have no Current or Long Term Liabilities shown?

[Skyline D]

Twiz has already pointed it out but you must by definition have either a bank balance or directors loan (if a company). Almost certainly both.

Your balance sheet doesn't balance by £6,099. It must be either loan finance or an overdraft if you definitely have no debtors or creditors.

[Skyline D]

Doh! Twix (with an 'x'), not Twiz. Apologies for typo.

[sherrardk]

Is your p & l statement correct? You need to go back and check that. Have you tried googling 'gcse balance sheets', there are loads of examples and they should point you in the right direction.

[unbalanced_42]

Hi Twix, Skyline and Sherrard,

Many thanks for your comments. The business uses a computer, printer, desk and chair (plus consumables). The costs of these assets (not including consumables) are £2903 - although we didn't buy them for the business at the start up as we already had them. All of it was new, so i simply included it as the asset value. Is that considered a directors loan - or am i just being nice to the new business by not requesting that money back??

The loss figure isn't actually shown in the bank statements, so the account is not overdrawn...although there is nothing in it to speak about.

So based on this i still don't know how to balance?

SherrardK - I can't see any problems in the P&L. I've googled and - having read the examples - can't see anything amiss????

Thanks again, but any further help would be great :)

[buildersmate]

Well that's part of the unbalanced Balance Sheet then - you gave your business £2903 of fixed assets for free. You need the business to pay for them by writing a cheque to yourself, then you could value them at cost less depreciation.

[unbalanced_42]

Thank you Buildersmate - i think it's starting to make sense :)

[Maydup]

This site might help explain the make up of the balance sheet.

http://www.businessli...er?topicId=1073889327

[Jenny100]

Do you not a bank overdraft or money owing to directors or credit cards or anything like that to have paid for all your set up costs?