Can Someone Help With My Financial Statements?

[davejonesbkk]

Hello,

Is anyone on this forum good at finance? I am doing an entrepreneurship class at an international uni here in Bangkok, I am currently putting the final business plan together and I am having some problems with the financial statements. My main problem is the balance sheet:

The balance sheet is at Dec 31st 2009 and it has 5 million baht in the current liabilities for the bank loan. My problem is that the bank loan is made at the start of 2009 (January) and throughout the year 1 million baht is paid back so the loan in current liabilities should be 4 million....but then it doesn't balance

I have played around with this for a while but don't seem to be able to figure it out, can anyone help?

Balance_Sheet_Complete.doc

Cash_Flow_Complete.doc

Income_Statement_Complete.doc

Edited September 6, 2008 by davejonesbkk

[JohnC]

You don't say what programme you are using therefore I cannot download your balance sheet, however, your balance should show income on one side (bank loan etc) and ALL outgoings on the other. A loan of 5mill would attract interest charges and presumably have a set repayment rate each month and it is this repayment rate grossed up for twelve months that should appear on the outgoings. A simple excel sheet would do this for you.

[davejonesbkk]

You don't say what programme you are using therefore I cannot download your balance sheet, however, your balance should show income on one side (bank loan etc) and ALL outgoings on the other. A loan of 5mill would attract interest charges and presumably have a set repayment rate each month and it is this repayment rate grossed up for twelve months that should appear on the outgoings. A simple excel sheet would do this for you.

Sorry those files are MS Wordd (2003)

In the income statement under 'Operating expenses' I have the 1 years payback of the principle of 1 million and then under 'Interest expenses' I have interest paymnets of THB 80,000.00 (8%).

[JohnC]

Take it out of word and put it into excel with a simple + - formula

[dave111223]

If you have

15,000,000 cash

5,000,000 Loan

10,000,000 Equity

Then you paid 1,080,000 towards the loan (80,000) being interest expense. You'd end up with:

13,920,000 Cash

4,000,000 Loan

9,920,000 Equity

The 1,000,000 would be directly subtracted from Cash and the Loan, whereas the 80,000 would reduce from Equity via being deducted from retained earnings.

Hope this helps.

[tangoll]

This was a long time ago, but your questions are answered in any Accounting 101 course -- mainly double entry bookkeeping.

The loan of 5 mil that you take from the bank would be entered as debit to an asset account Cash: 5 mil, and credit to a debt account Short term Loan: 5 mil.

When you repay the loan of 1 mil, the corresponding entries would be a credit to Cash: 1 mil, and a debit to Short Term Loan: 1 mil.

The interest payment would be a debit (or is it credit, can't remember) to a P+L account Interest Payment: 80,000, and the counter entry would be to Cash. If you have no other income and expenses for the year, your P+L would show a loss of 80,000 which would be offset against your Retained Earnings Account, to close out the P+L accounts. This would keep your Balance Sheet balanced at the end of the year. Your Cash account would have been reduced by 1.08 mil which would be matched by reductions in the Short Term Loan and Retained Earnings accounts.

I think that's how it works. Don't confuse your Balance Sheet (which are Assets balanced against Debt+Retained Earnings or Net Worth, at a point in time) with your Profit and Loss Statement (which are the accounts for Revenue, Expenses, and Profit over a period of time) or with Cash Flow (which show the movement of cash in and out over a period of time).

Good Luck.

[davejonesbkk]

Ok thanks a lot guys! I'll take another look at these and try and get them in order.