Hi there I am an accounts administration student and for my assignment I have to write up a statement of financial position. The question states that I first must make adjustments to the general ledger and ensure the credits and debits balance. I have done this but when I try to write up a statement of financial position the net assets and the closing balance and total equity do not match?? i have checked everything and the only thing i can think that i have done wrong are the adjustments to the ledger. These are the two things i had to add Inventories on hand after a physical stock count at $21,000 and Owner contributing cash $20,000. I assumed that the owner adding cash would affect the owners capital and cash so they would both increase that seems ok but when adding inventory to the debit side I am unsure as to what would be credited?
New Zealand General Ledger adjustments
- Thread starter rach572
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The offsetting credit against Inventory should be to COGS (Cost of Goods Sold). This will have the effect of reducing Cost of Goods Sold; increasing Gross Profit (as well as Net Income) and ultimately represent an increase in Owner's Equity. An increase to inventories increases total assets.
The adjustment you made for the $20k capital contribution seems correct. This too will increase total assets and owner's equity.
Re-run your adjusted trial balance and prepare another Balance Sheet. If done correctly, total assets less liabilities should equal owner's equity.
Good luck.
The adjustment you made for the $20k capital contribution seems correct. This too will increase total assets and owner's equity.
Re-run your adjusted trial balance and prepare another Balance Sheet. If done correctly, total assets less liabilities should equal owner's equity.
Good luck.