Week 4

FinancialStatementExample.xlsx

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Sheet1

YoYo's R Us						YoYo's R Us					YoYo's R Us
Statement of Profit and Loss						Balance Sheet					Cash Flow Statement
For the years ended December 31,						December 31, 2019					For the year ended December 31, 2019
		2019		2020
Net Revenues			$ 8,000		$ 12,000	Current assets					Cash Flow from Operating Activites
							Cash	5,300	(a)			Net Income:	2,520
Less: Cost of Goods Sold			2,000		3,000		Accounts Receivable	1,000				Add: Depreciation	500
							Inventory	1,000				Subtract: Increase in accounts receivable	(1,000)
Gross Profit			6,000		9,000		Total Current Assets		7,300			Subtract: Increase in inventory	(1,000)
						Equipment						Add: Increase in accounts payable	2,280
Operating expenses							Computer		2,500		Cash flow from operations			3,300
	Wage and salaries	1,000		2,000			Less: Accum Depr and Amort.		(500)
	Rent	300		300			Total Equipment (Net of Depr.)		2,000		Cash Flow From Investing Activities
	Selling expense	400		600								Capital Expenditures (computer)	(2,500)
	Depreciation	500		500		Total Assets			9,300	equal	Cash flow used in investing			(2,500)
Total Operation Expenses			2,200		3,400	Current Liabilities					Cash Flow From Financing Activities
							Account payable	2,280	(b)			Contribution from shareholder	2,000
Pretax operating income			3,800		5,600		Short-term debt	2,500				Proceeds from short term loan	2,500
							Total Current Liabilities		4,780		Cash flow from financing			4,500
	Interest expense		200		200
						Total Liabilities			4,780		Net changes in cash			5,300
Profit before taxes			3,600		5,400
						Shareholders' equity					Cash beginning balance			- 0
	Income tax expense - 30%		1,080		1,620		Contributed Capital		2,000
							Retained earnings		2,520		Cash ending balance			5,300
Net Income			2,520		3,780		Total shareholders' equity		4,520
						Total liabilities and shareholders' equity			9,300	equal
									- 0
For the assignment in week four you would have two columns											Remember we started the company this year so all balances were zero
of information for the Profit and Loss statement, one for each year.						Assume we started the company this year so no items in balance					so the ending balance on the balance sheet represents an increase in the
In my example, I use the first year to prepare my balance sheet and						sheet to begin the year.					account.
cash flow statement.
						Cash	Beginning balance	- 0
							Contributed capital	2,000	Company started with a $2,000 contribution
Gibbons, G., Hisrich, R.D., & DeSilva, C.M. (2015). Entrepreneurial Finance: A Global Perspective (1st ed). Thousand Oaks, CA: SAGE.							Loan for computer	2,500	We borrowed money to purchase our computer
							Revenue 8000 less 1000 A/R	7,000	Cash received for sales
							Purchased computer	(2,500)	We purchased a computer.
							Paid for inventory	(2,000)	Inventory used in COGS
							Paid wages	(1,000)	Paid wages
							Paid rent	(300)	Paid rent
							Paid selling expense	(400)	Paid selling expenses
							Ending cash balance (started at zero)	5,300	(a)
						Accounts Payable
							Inventory	1,000	Inventory at year end still payable
							Interest Expense	200	Accrued but not paid yet.
							Income tax expense	1,080	Accrued but not paid yet.
								2,280	(b)
						YoYo's R Us					YoYo's R Us
						Balance Sheet					Cash Flow Statement
						December 31, 2019					For the year ended December 31, 2019
						Current assets					Cash Flow from Operating Activites
							Cash	5,300	(a)			Net Income:	2,280
							Accounts Receivable	1,000				Add: Depreciation	500
							Inventory	1,000				Subtract: Increase in accounts receivable	(1,000)
							Total Current Assets		7,300			Subtract: Increase in inventory	(1,000)
						Equipment						Add: Increase in accounts payable	2,520
							Computer		2,500		Cash flow from operations			3,300
							Less: Accum Depr and Amort.		(500)
							Total Equipment (Net of Depr.)		2,000		Cash Flow From Investing Activities
												Capital Expenditures (computer)	(2,500)
						Total Assets			9,300		Cash flow used in investing			(2,500)
						Current Liabilities					Cash Flow From Financing Activities
							Account payable	2,520	(b)			Contribution from shareholder	2,000
							Short-term debt	2,500				Proceeds from short term loan	2,500
							Total Current Liabilities		5,020		Cash flow from financing			4,500
						Total Liabilities			5,020		Net changes in cash			5,300
						Shareholders' equity					Cash beginning balance			- 0
							Contributed Capital		2,000
							Retained earnings		2,280		Cash ending balance			5,300
							Total shareholders' equity		4,280
						Total liabilities and shareholders' equity			9,300