How to prepare balance sheet

4.5. Step 5: Enter subtotals from trial balances on balance sheet template

The final step is to transfer the classification subtotals from the trial balance (Illustration 6) to the balance sheet template (Illustration 4). For example, we transfer the $391,000 subtotal from the trial balance for Cash & Cash Equivalents to the identical line on the balance sheet template. The result will be a completed balance sheet:

Illustration 7: Completed balance sheet template

Your Company Name
Trial Balance
December 31, 20X0

ASSETS

Current Assets:

   

Cash & Cash Equivalents

$ 391,000

 

Marketable Securities

0

 

Accounts Receivable

363,500

 

Inventories

289,000

 

Prepaid Expenses

8,400

 

Total Current Assets

 

1,051,900

     

Fixed Assets

 

828,000

Intangible Assets

 

140,000

Investments

 

75,000

Other Non-current Assets

 

54,000

     

TOTAL ASSETS

 

$ 2,148,900

     

LIABILITIES

Current Liabilities:

   

Accounts Payable

285,000

 

Accrued Expenses

570,000

 

Short-term Loans

245,000

 

Current Portion of LT Debt

100,000

 

Income Taxes Payable

90,000

 

Total Current Liabilities

 

1,290,000

     

Non-current Liabilities:

   

Line of Credit

53,000

 

Term Loan

250,000

 

Total Non-current Liabilities

 

303,000

TOTAL LIABILITIES

 

1,593,000

     

EQUITY

Capital

50,000 

 

Current Year Earnings

159,000 

 

Retained Earnings

346,900 

 

TOTAL EQUITY

 

555,900

     

TOTAL LIABILITIES & EQUITY

 

$ 2,148,900

A few notes about the completed balance sheet:

  • The subtotals and totals on the balance sheet (i.e. the $1,051,900 for current assets) were directly determined when all subtotals from the trial balance were transferred to the balance sheet template.
  • The total assets of $2,148,900 equal the total liabilities and equity of $2,148,900. However, these totals don't match the trial balance totals for debits and credits of $2,580,400 (Illustration 6). The reason these totals don't match is because in the trial balance the totals are calculated for the debit and credit balances separately. In the balance sheet, though, some credit balances are subtracted from debit balances and vice versa (i.e. due to contra asset and contra liability accounts). Therefore, the totals on the trial balance and the balance sheet may not match.
  • Normally, if a particular balance sheet classification has a zero balance (i.e. Marketable Securities in Illustration 7), the classification line is not shown. We left Marketable Securities in there so it is consistent with the balance sheet template (Illustration 4) we prepared earlier. The line for Marketable Securities can be taken out without any "harm" to the balance sheet.
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