My Opening balance sheet isn't balancing.. please help!

[Bexflower]

Hi.

This is homework.

I was just wondering if someone could explain why my opening balance sheet isn't balancing.
And then how I go about balancing it?

I've asked my teacher and others but they consfuse me, and say just fiddle the books basically to make it balance. But I want to know the actual reason why it isn't balancing so I can go about changing it properly.

This is my balance sheet: http://oi44.tinypic.com/14ddabc.jpg

Thanks for your help.

[factor-fiction]

Have you been given all these individual amounts and been asked to organise them to produce a balance sheet?
If so, have you included all the items?
I am not sure why some of the items appear- for example what does the P&P entry represent?
And I'm not sure what the Loan item is. Is that in the form of cash/bank balance? If not, should you show your balance there and include the loan as a liability?

[Bexflower]

@factor30

I basically had to research the figures and find them, they weren't just given to me. The P&P is postage and packaging.

The loan is bank loan of £5000 but for some reason my teacher worked out that my repayments would be around £220 per month (I think over 2 years). In the long term liabilities figure do I put the full loan amount in - £5000 or the repayment figure for one month- £220?

I said that I have around £1000 cash savings and give a £10,000 legacy if this helps, do I need to include this in my Opening balance sheet somewhere?

Any ideas why the balance sheet isn't balancing?

[factor-fiction]

I'm rusty on this but I would think the £5000 loan would go under liabilities- but I'm not sure whether/how it would be split between short term and long term.
I'm not sure the P&P and some other items would be liabilities - is it an amount you owe or just something you expect to have to spend money on in the course of the business because the latter would just be an operating cost I think and wouldn't go in the BS

[factor-fiction]

Hi 10clarionst.
There are a few financial statements that can be produced- income/expenditure, profit and loss, statement of application of funds, balance sheet, ...
This one doesn't balance- there is an unexplained difference between the figures of 5537 and 6430

[Flyhalf]

Looks like you have net liability.
Assets 1190 + 240 = 1430. These are capital assets
Liabilities 673 + 5000 = 5673. Some of them MAY qualify as expenses against takings, but certainly not all.
Net 4543.
This assumes that the loan has just been introduced, and no interest has become due and/or no repayments made.
Hopefully you can start adding profits from P&L account to offset this.

[factor-fiction]

I think these accounts confuse BS items and income/expenditure items.

[factor-fiction]

Hi 10 ClarionSt- this is a balance sheet so it shouldn't be a statement of expenditure. And I think the 893 figure is simply the sum of the current and long term liabilities.
I can't see where the working capital figure comes from. Is that definitely correct?

I think you need to see your tutor - I think you may have misunderstood the 'fiddle the books to make it balance' comment.

[Flyhalf]

Factor30 has helped clear the mist for me -I haven't dealt with accounts since retiring over 5 years ago.

BEXFLOWER something is missing from your statement. What is the bank balance of the "business"? If my first post is correct, it should be 4543.

[factor-fiction]

Yes- maybe the working Capital figure (or something close to it) should be in the Assets section as 'bank balance/cash' and the £5000 loan should be under liabilities.
I don't understand though why some of the liability entries are there at all though- eg P&P

[Flyhalf]

If unpaid, they are indeed liabilities.
If paid as pre-trade expenses, he still has to explain what has become of the £673 of the loan money, which presumably is the whole of the opening capital.
Placing them individually allows for allocation at the first P&L account.
To be frank, I think we're wasting our time trying to guess what is going on, and he should go back to his tutor for proper guidance on the basics of preparation of balance sheets.
He did explain that P&P was postage and packaging.

[factor-fiction]

I know P&P is postage and packing/packaging- my query was not what it is but why it is showing as a liability- is it just P&P expenses incurred (in which case it shouldn't be there I suggest, or is it money owed to another party in respect of P&P.
Anyway, we ado agree that Bexflower needs to go back to his/her tutor as we are clutching at straws to some extent

[factor-fiction]

Hi 10ClarionSt.
When I said "I think you need to see your tutor - I think you may have misunderstood the 'fiddle the books to make it balance' comment" I was making this point to Bexflower as he/she said in her OP that this what she had been advised to do by her teacher. I'm not sure where I gave the impression you had said it
And (and I am addressing this to 10ClarionSt), a balance sheet does NOT balance income and expenditure- it is something completely different.
http://en.wikipedia.org/wiki/Balance_sheet

[twix123]

Is Bexflower really Bettypratchit in disguise...

http://www.theanswerb.../Question1115176.html

similar question and figures in the 'Balance Sheet', then throwing in a 10,000 legacy and 1,000 savings !

[factor-fiction]

I think you may be right, twix123.
Anyway, I think Bex and Betty need to speak to their teachers for help here