6.2 Pro Forma Financial Statements

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Nov 24, 2024

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Entrepreneurship | 6.2 Pro Forma Financial Statements Directions: A balance sheet reports the assets, liabilities, and owner’s equity. To prepare a balance sheet correctly, you must understand which items are considered assets and which are liabilities. The following list shows the figures from Pretty Pet Groomers on June 31, 20--. Select each item from the list and place it in the appropriate column in the table below. Calculate the company’s total assets, total liabilities and owner’s equity based on these figures. Cash $15,500 Accounts Payable $ 8,000 Accounts Receivable $11,000 Notes Payable $15,000 Equipment $18,000 Grooming Supplies $ 5,000 Assets Liabilities Cash $15,500 Grooming Supplies $5,000 Equipment $18,000 Accounts payable $8,000 Accounts Receivable $11,000 Notes Payable $15,000 Total Assets $44,500 Total Liabilities $28,000 What is the Owner’s Equity? 44,500 - 28,000 = 16,500 The balance sheet is a snapshot of the financial health of a business. Using the information from above, how would you describe the financial condition of Pretty Pet Groomers on June 31, 20--? They are in a good situation because they have more money in assets than liabilities. This shows they are financially stable and can pay off their debts. All of their costs balance out as well, and their liabilities and equity equal their assets

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