Balance sheet - how do I calculate the capital?

louquest | 21:32 Mon 09th Mar 2009 | Business & Finance

14 Answers

I thought that to calculate the capital figure you take the assets and subtract the liabilities? But this only gives me the Working Capital figure. What do I have to do to arrive at the Capital figure? I've almost burned my calculator out trying to come up with an answer!

This is a shortened version of the balance sheet:
:
Fixed Assets total 68,035

Current Assets total 8,757

Current Liabilities total 6,462

Makes a WORKING capital of 2,295

Financed by
Capital ? (how do I work this out?)
Plus Net Profit 14,970

Drawings 11,6000

I have to prepare a Capital Account so can't go any further till I work out the capital figure.

Can anybody help?!!!

Giving credit

drinks licence

Answers

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dr b

capital = total assets - total liabilities

working capital = current assets - current liabilities

total assets = fixed assets + current assets

Do you see the difference between current assets and total assets?

factor-fiction

I'm no accountant but this may be along the right lines. I'd need top check what DRAWINGS are though.

Fixed Assets total 68,035
Current Assets total 8,757
Current Liabilities total 6,462
Makes a WORKING capital of 2,295
TOTAL 70,330
Financed by :
Capital (70330-14970-11600?) 43760
Plus Net Profit 14,970
Drawings 11,600
TOTAL 70,330

louquest

Question Author

Oh! I see! So I now have a Working Capital of 2,295 and a Capital figure of 70,330. I don't include long-term liabilities in that do I? I think I'll do this fresh in the morning but thank you so much for your help!

ummmm

And good luck in what you're doing :-)

factor-fiction

Oops, I think drawings should be negative, so the capital figure would be higher.
You didn't mention any long term liabilities. Are there any?And what about profits from previous years?

You may want to use this template as a guide http://www.staffs.ac.uk/schools/business/bsadm in/staff/s5/accsys/wone.htm

louquest

Question Author

Oops, I didn't know long-term liabilities would figure in the calculation - which is precisely why I'm in a muddle!
The long-term liability is a 5-year loan of 7,500
So, to recap, I have:

Fixed Assets = 68,035
Current Assets= 8,757
Current Liabilities = 6,462
(Working Capital = 2,295)
Long Term Liabilities 7,500
Financed by:
Capital ? (which we thought was 70,330 but maybe not!)
Plus Net profit for yr ended 31 Oct 14,970
Less Drawings 11,600

There are no profits from previous years to take into account.

So, to get the correct capital figure, do I deduct the Net Profit figure and the Drawings figure which then would make the capital 43,760?

Thank you!

factor-fiction

I'm probably not qualified to do it and don't want to risk getting it a bit wrong for you but if you follow the template in the link I posted it should all fall into place

dr b

Fixed Assets = 68,035
Current Assets= 8,757

so total assets = 76,792

Current Liabilities = 6,462
Long Term Liabilities 7,500

so total liabilities = 13,962

this leaves a gap of 62830 to be financed, by:

Capital xxx
Plus Net profit for yr ended 31 Oct 14,970
Less Drawings 11,600

so xxx +14079 - 11600 = 62830; solve for xxx.

dr b

whoops, that's 14970 in that last equation, of course.

Skyline D

In a non company, "capital" is the balancing figure on the other side of the balance sheet. It would not, in normal presentation, include long term liabilities.

Basically, Fixed Assets + Working Capital - LT Liabilities = Balance Sheet Total.

The other side is the Capital balance at year end which will be made up of Opening Balance + Profit for year (or less Loss for Year obviously) - Drawings.

In this case, and presuming you haven't missed any more info out of the question, then the balance sheet total = 68,035 + 8,757 - 6,462 - 7,500 = �62,830.

Therefore Capital Account is:
Opening Balance 59,460
+ Profit for Year 14,970
- Drawings 11,600
= Closing Balance �62,830

louquest

Question Author

Thank you so much everybody! I got a chance at lunchtime at work today to find a quiet corner and, using the simply explained steps from you all, I arrived at the answer of 59,460 as my capital figure.

It was the simple process of taking the Net Profit figure and deducting the drawings which gave me the figure of 3,370, then deducting 3,370 from 62,830 which gave me the Capital figure of 59,460 . Then, of course, 59,460+14,970-11,600 = 62,830!!

I was then able to complete the next part of the question which was to prepare the capital account..

My next question has 3 parts - which me luck!!!

Oh, and factor 30, does that website where you kindly gave this link:

http://www.staffs.ac.uk/schools/business/bsadm in/staff/s5/accsys/wone.htm

have an area where I could find how to calculate accumulated fund? That is such a great site - so well organised and simple to follow. I wish I'd had something like it months ago!

factor-fiction

Taurusian

This should be easy...
Capital= TOTAL ASSETS- TOTAL LIABILTIES
Therefore 76792 (fixed assets+current assets) - 6462 (onli CL mayb cuz there is no Long term liability)= 70330.
Now that u have the balancing figure...u can use the profit and drawings to balance the figure which will be.... 70330=X+14970-11600
Capital is 66960!!!
Hopefully this ryt!! I m a student too...

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