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Female Narrator: Welcome to another
Lions and Tigers video.
Um...this is your assignment for the week.
What organization structure would you recommend
for Lions and Tigers and why?
That's gonna all be addressed in the discussion board.
So...um...just post your comments there,
and I will be monitoring the discussion.
And then two, we are in the third week of our case problem,
and let's go ahead and do all three financial statements.
So...here's the trial balance from last week,
and everything balances.
So now, we are going to take this information,
and we are going to copy it and compile it,
I should say, in the financial statements.
Notice that all of your assets...are together.
Notice your liabilities... are together.
Your stock or your equity is all together,
but notice we also break equity up
between revenue and our expenses--
or our net income.
So really, we're gonna start at the bottom
and work our way up.
So the first financial statement that you were asked...
are asked to do, of course, is the income statement.
Now, I know in this chapter,
we're getting involved in income statements.
But this is a pretty small company,
so we don't really have quite as much room to move.
But here's our revenues.
Now, we would list each revenue that we have,
but in this company, we only have one.
So we're gonna say 1,032, and our subtotal
or our total revenue is going to be 1,032.
And we got that straight from the trial balance.
Then, we're gonna list our expenses,
and on the trial balance,
you'll notice rent expense was 500,
salary expense was 125, and cleaning expense was 350.
If I add all those numbers together, I get 975,
so 1,032 minus 975 gives me net income of $57.
Now once again, this information
is all copied straight from the trial balance,
so we only need one piece of paper in front of us.
We don't need to have all the journal pages, the ledger pages.
This is what we're gonna prepare off of.
The second statement we do in the sequence
is we do our retained earnings statement.
Notice the date ranges for the month ended.
Now, this was the first month of the company,
so the beginning retained earnings
would have been for November 1, 2010,
and the answer here would've been 0.
We had 0 retained earnings.
The net income reported for November 2010 was 57.
Notice this number goes right there--
less our dividends.
In this problem, we didn't have any,
so our ending retained earnings
equals our net income in this case.
So this is November 30, 2010, so our retained earnings is $57.
Now, we're gonna go on to our balance sheet.
Now, on our balance sheet,
we're gonna start at the top of the trial balance,
and we're going to say current assets:
15,000...I'm sorry, 16,525...16,525.
Accounts receivable was 232.
Grooming supplies was 1,000.
And prepaid rent was 1,000.
Now notice, I have this total here for current assets.
If we total up our current assets,
we're going to get 18,757,
and really, we could've put these over here.
We wanna know current, because we wanna make sure
that we have enough current assets
to pay our current liabilities.
Long-term assets and liabilities
have different relationships with each other.
The only noncurrent asset we have
is property, plant, and equipment,
so that's gonna be 5,300.
We don't need a subtotal, 'cause there's only one.
That gives me total assets of 24,057.
Okay?
Remember, you guys can pause these videos at any time.
Now, we're gonna go on to our liabilities.
Now, the only current liability we had is accounts payable.
You wouldn't have needed to subtotal that,
but I would like to show you how that should look.
The only long-term debt we have is a notes payable of 3,500--
500 plus 3,500 gives me total liabilities of $4,000.
Now, we have capital stock of 20,000
and then retained earnings.
Now, this is where students often get in trouble.
The retained earnings number
that you use all the way down here...
keep this line going, 'cause it's a long one...
needs to be the number from the retained earnings statement.
So this has to be 57...
this has to be $57.
It's really important that we get that
from the retained earnings statement.
We add the two together.
We get 20,057, plus my liabilities of 4,000,
gives me total liabilities
in stockholder's equity of 24,057.
You'll notice that that's the same number that we have here,
so it's really important that these balance.
That is one reason why it's called a balance sheet.
Thank you for coming and viewing my video,
and let me know if you have any other questions.