Federal 1065 Balance Sheets (Schedules L and M-1/2)


K

kwc

Can someone help me understand how to complete schedules L
and M-1/2 of the Federal 1065?

My wife and I started a small business (software
development, with product sold through a third party via
downloads from the web) and filed as an LLC in PA. Neither
of us have an accounting background. We meet the exemption
criteria for completing the schedules during our federal
filing, but PA still requires balance sheets.

Our business has essentially no assets -- bought a computer
(with our own money, startup costs) to do the programming,
and we upload the software to a web site for
sales/distribution. We're operating out of our home. I
assume the balance sheets would be pretty straightforward
but I'm still confused. :-(

How do I identify the computer purchase and corresponding
depreciation over the year on the balance sheet (schedule
L)? Note we are claiming depreciation on Federal Form 4562.
How would the beginning of the year differ from the end,
and which row(s) would it fall into? How would this also
appear in M-1 and M-2?

Sorry for the basic question -- I appreciate your assistance.

Thank you,
Kevin
 
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G

Gene E. Utterback, EA

kwc said:
Can someone help me understand how to complete schedules L
and M-1/2 of the Federal 1065?

My wife and I started a small business (software
development, with product sold through a third party via
downloads from the web) and filed as an LLC in PA. Neither
of us have an accounting background. We meet the exemption
criteria for completing the schedules during our federal
filing, but PA still requires balance sheets.

Our business has essentially no assets -- bought a computer
(with our own money, startup costs) to do the programming,
and we upload the software to a web site for
sales/distribution. We're operating out of our home. I
assume the balance sheets would be pretty straightforward
but I'm still confused. :-(

How do I identify the computer purchase and corresponding
depreciation over the year on the balance sheet (schedule
L)? Note we are claiming depreciation on Federal Form 4562.
How would the beginning of the year differ from the end,
and which row(s) would it fall into? How would this also
appear in M-1 and M-2?

Sorry for the basic question -- I appreciate your assistance.
The best recommendation I can make to you is this - either
you or your wife, and preferably both of you, should go to
the local community college and take Accounting 101. This
will give you a basic understanding of accounting principles
and help you understand what a balance sheet is.

Gene E. Utterback, EA
 

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