Please help.. I am not a math expert and this is my first financial course. I am having a problem getting a balance sheet to come out correctly. Here is a snap shot of what is given to us and requesting that we create a balance sheet and income statement. I also included a snap shot of what I attempted so far with my balance sheet only.

ABC Corporation Adjusted Trial Balance December 31, 2010

Debits Credits
Accounts Payable 11,000
Accounts Receivable 8,000
Accumulated Depreciation-Buildings 60,000
Accumulated Depreciation-Equipment 5,000
Additional Paid in Capital 5,000
Allowance for Doubtful Accounts 1,200
Bonds Payable 25,000
Building 180,000
Cash 14,000
Common Stock 10,000
Cost of Goods sold 72,000
Depreciation Expense 10,500
Dividends 5,000
Equipment 15,000
Insurance Expense 6,000
Interest Expense 1,200
Interest Revenue 500
Inventory 5,000
Notes Payable (due 2013) 15,000
Patents 3,000
Prepaid Expenses 2,000
Rent Expense 18,000
Retained Earnings 32,150
Salaries Expense 45,000
Sales 225,000
Supplies 750
Unearned Revenues 400
Utilities Expense 4,800
390,250 390,250
Here is what I have done so far

ABC Corporation Adjusted Trial Balance December 31, 2010 Balance Sheet
ASSETS
Cash 14,000
Accounts Receivable 8,000
Allowance for Doubtful Accounts 1,200
6,800
Inventory 5,000
Common stock 10,000
Total current assets 25,800
Plant and equipment
Buildings 180,000
Accumulated depreciation 60,000
120,000

Equipment 15,000
Accumulated depreciation 5,000
10,000
Total assets $155,800



Liabilities and Stockholders Equity
Accounts Payable 11,000

Total current liabilities $11,000
Long term liabilities
Notes payable (due 2013) 15,000

Total liabilities $26,000
Stockholders equity
Bonds payable 25,000
Retained earnings 32,150
Common stock 10,000
Total stockholders equity $67,150

Total liabilities & stockholders equity $93,150

All of the math involved in financial statements is nothing but basic arithmetic, adding and subtracting to be exact. While some things in accounting require decent math or even algebra, this is quite literally nothing but adding and subtracting.

It requires not math expertise, but an understanding of what the accounts are and how they relate to each other -- i.e. theory.

Quote:

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ASSETS
Cash 14,000
Accounts Receivable 8,000
Allowance for Doubtful Accounts 1,200
6,800
Inventory 5,000
Common stock 10,000
Total current assets 25,800

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Common stock is equity, not an asset. When you own stock in another company, that's an investment and an asset. This is not what is owned in another company. This is what others own in this company. Hence, this is what belongs to the owners of this company: equity. (If it was what this company owned in another company, it would be called "investment" of some sort, not stock.)

Quote:

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Stockholders equity
Bonds payable 25,000
Retained earnings 32,150
Common stock 10,000
Total stockholders equity $67,150

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Bonds payable is a long-term liability not equity. PAYABLE implies that money is due to someone else, always a liability. Not quite sure why you think that's equity.
You've duplicated the common stock by putting it here and in assets. Nothing goes more than one place. And you need to update retained earnings and you have to do an income statement and statement of retained earnings first... people like to leave those out. If they aren't required for the problem, you still have to work out the calculations even if you don't do the statement.

OK, now we back up.

Accounting equation:
Assets = Liabilities + Equity
If that is not memorized, get it memorized yesterday. This is the basic foundation of everything. Yes, it's an equation, but in this version is a simple equation. Again, it's the theory not the math.

The assets are everything the company owns or has some claim to. Owns is easy to figure out. But "claim to" means things like receivables, which represent what others owe the company, so you have a claim to that. Prepaids - you've paid something up front and have a claim to whatever you have coming. (Like an insurance policy paid up front - you still have coverage coming to you.)

The right side of this equation is split between who has a claim on this company's assets. Liabilities are what is owed to others or obligations to others. Since they are owed, they have first claim. ("Obligations" are something owed with monetary value but it isn't money owed. The most common is unearneds cause you owe a service or product.) Equity is the claim of the owners (stockholders). So the claim of the creditors and claim of the owners has to add up to the total assets of the company.

A balance sheet is the accounting equation split down into details. So instead of just "assets," we have a list of all assets that exist, add them up, and that total is the left side of this equation.

These are also sub-categorized. Current assets are those that will be received or used within one year. Plant assets are those that are tangible (have physical substance) and will be used for over one year. You also have one "Intangible" asset which is another category. Intangibles are things like copyrights, goodwill, trademarks and patents. You've missed some assets.

Liabilities are sub-categorized into current and long-term. Current is anything to be paid (or obligation met) within one year. Long-term is over a year. You've missed a couple of liabilities.

Equity is split between paid-in capital, which is what the investors put into the company. You missed something there - hint in last sentence. And retained earnings, which is what the company earned less any dividends paid out. Hence, what of the earnings they retained in the company ("retained earnings"). That account is cumulative -- i.e. what was there from past years is still there if it wasn't paid out in dividends. You haven't updated your retained earnings. Yours is still back at the balance from the end of the prior year.

We can expand the right side of that equation:
= liabilities + paid-in capital + retained earnings + revenues - expenses - dividends

The bold part actually goes into retained earnings as explained above. The earnings of the company belong to the stockholders, so are part of equity. However, during the period we must keep track of these separately to know what is going on in our company. These are temporary accounts, used during the period, but moved into retained earnings at the end of the year. If you still have revenues, expenses and dividends listed, they haven't been moved into retained earnings yet, so you must do that. Otherwise, you will never balance no matter if everything else is correct.

The red part is the income statement: revenues less expenses = net income. If you don't actually do an income statement, at least calculate net income. (It's still all just basic arithmetic.)

The statement of retained earnings takes the bold stuff and updates retained earnings. So you do exactly what it says: take the prior retained earnings, add the net income and subtract the dividends, to get a new updated retained earnings. Once that is done, you've included everything, you're back to your basic unexpanded accounting equation and the balance sheet should balance (if everything else is right, of course).

See what you can do.

morgaine300-Thank you so so so very much for your kind heart and assistance. Thank you a million times.

You're quite welcome. Your kind appreciation is when it feels worth it. :-)