UK Balance sheet (forecast) - Shareholder's equity

[sobiyan]

Hi all,

I prepared forecast for a new start up but the balance sheet doesn't look right. The Shareholder's equity is showing up as negative and the total Shareholder equity seems low when compared to net profit from previous years. Please advise if you can spot where I made the error?

Thanks

 

[sobiyan]

with attachments now

 

[kirby]

You need to start over.
I suspect your balance sheet is forced into balance using the Equity Capital line as the balancing figure. There is no other reason why it would change like that.
You can easily tell that you are forcing balances when you see that your Balance Sheet cash amount is always $100,000 when on your cash flow projection sheet the corresponding ending cash balance varies from $161,730 to $1, 868,670.86, which ain't $100,000.
So put lots lots more thought and work into this.

But the report format is pretty...

 

[hirschcogmail.com]

Hi all,

I prepared forecast for a new start up but the balance sheet doesn't look right. The Shareholder's equity is showing up as negative and the total Shareholder equity seems low when compared to net profit from previous years. Please advise if you can spot where I made the error?

Thanks

Hi

This happens when liabilities exceed assets. It is not necessarily an error you made. However if you want positive equity you need to either increase assets or reduce liabilities. For a client I did that by showing the overdrawn directors loan account as a dividend.

Kind regards