Pacing 123 and then I'm going to indent those. So I'm on the cell, I'm going to go to the Home tab and go to the alignment group going to increase the indentation like so. And then we're going to go into the inner column of these two, the inner column does not mean debit or credit. The inner column just means that we're going to sub categorize indicated by the title, the colon, the indentation, then putting the numbers on the inside. Once again, I want to flip the sign I want to make that a positive number, I do not want to have negative numbers on my financial statements. One way to do that is to just instead of hitting equals just hit negative, and that will take whatever number I put in there and flip the sign.

So negative of a negative 780 is a positive 780. So we're gonna do that same thing down here and say negative of the 200. Negative of a negative 200 is a positive 200. And negative of the one five negative a negative is going to be a positive one, five. So now we found a home for these now, just keep with The green which is found a home for all of them, and then we're going to sub categorize those outside. But instead of calling them total current liabilities, I'm just going to call them total liabilities and enter, and then I'm gonna go back on that cell and indent it one more time.

So I'm in the home tab, alignment indent one more time. And I'm going to put that on the outside. So we're gonna put this on the outside at this time. Now, why is it total liability not total current liabilities, because the total liabilities are, there are no other liabilities. So we're going to do this with the sum function. So I'm gonna say equals s u m, shift nine, and then highlight this area.

So we've got l five, colon, l, seven, and Enter. And if we want to double check that we can highlight these and say this should be summed up, and if we just highlight them in the taskbar, it sums it up for us. We can also sum them up or We're here, and the nine five sums up over here as well. We know that this now ties out to that even though these are credits, these are positive numbers, we're not dealing with debits and credits in this section. Now the next section that we're going to have is going to be called owner's equity. And so we're going to be an owner's equity.

Now, owner's equity is gonna be one of the more confusing sections. For this reason, we see that this whole thing is blue down here, but it's a slightly different blue we have over here, and there's only gonna be one owner's equity type account on the balance sheet. That type account will be called owner capital. So I'm going to take the capital account and copy that, that's going to be the amount on the balance sheet here. And note though, I'm going to do this incorrectly, and then show you why. Then if I take the balance from this owner's equity section, I'm gonna flip the side again by saying negative of this 40 to 300.

So enter, and that flips the sign to a positive so now we've got liabilities and equity. And if we take total liabilities and equity down here, I'm going to use the sum function to add those two up equals s u m, colon and shift and highlight from the nine, five to the 42, three and Enter. And then again, if I highlight the sales, I get 51 851 eight. So that added up correctly and the product and if I highlight these, I can see that I found all those 51 eight. The problem is though, that my total assets do not match my total liabilities and owner's equity. So the question is, why is that if this is the only account here, how is it that we are not in balance?

And the reason for that is that all these are blue because basically all this is part of owner's equity. So we need to crunch all this into basically one number if we crunch all this into one number, that should make it work because what we have here are assets here and up to 66 440 liabilities and owner's equity 66 440. So it has to work. But we're missing in the balance sheet all of this. And why is all of this going to be included as part of equity, because at the end of the day, it is part of equity. This is basically the beginning equity.

This is the story of what has happened in the last month. So at the point in time, as of this point in time, we need to squish all this into one number. This account, although it doesn't say so it was really owner's equity as of the beginning. plus any investments, not including any draws not included in the income or expenses. But over here, although it doesn't say the date on the capital account, it does say the date up here. This capital account means as of May 31, therefore, we're going to have to sum up the entire blue section over here, and then it should work.

So let's try that I'm going to delete this. I'm gonna put negative su M and sum up from the 40 to 30. Down to the miscellaneous expense of a 950. And when we hit enter, see if that puts us in balance. And it does. So that's what we want to show you.

So now we found a home for all of this, right? I highlight all this, we found a home, it's all going the right way. Why? How do we know because weren't balanced or unbalanced and went the right way. But we want to have more about this. We want to know more about that number right there.

And we want to know how we did last year know what this or last month in this case know what this number means. Assets 66 440 minus liabilities, nine, five gives us the book value of 56 940. So this can be thought of as kind of the amount that we could walk away from if we sold the assets, got cash, then paid off the liabilities and then walked away from it. Of course, it wouldn't work perfectly that way in a perfect world. But in a perfect world. That's how it would work.

So that's kind of the book value of the company. We want to know how we did basically last year. So that's why these accounts They're going to be yellow, because we're going to see them in multiple places on the financial statements. We're going to see this on another area in the financial statements that will be coming from the statement of owner's equity. So I want to tell this story. Again, I want to find a home for all of these accounts, again, in the form of timing, and our timing statements are called the income statement, and the statement of owner's equity.

Once we do those timing statements, we will then come up with the same end result number being this 56 940. And let's see how that will work. Now our timing statements are going to be called not just the end date, the income statement will be for the month ended, in this case, may 31. Two x one so it's for the month ended in this case, meaning it has a beginning and an end. If we talk about revenue if I asked you how much money you make, you can't answer that by saying just pull a number out without assuming what are you In a month in a year, on our web, you need a timeframe. So in this case, it's going to be the month.

So we're going to have revenue and expenses, the only two accounts on the income statement, we're going to start off with revenue. So the first account is just going to be revenue. So I'm going to copy this, I'm going to paste it right here, paste it 123. And there's no subcategory because we only have one type of revenue, we do one thing, therefore, we're not going to bring it to the inside and then subtotal it on the outside, we only have one revenue account, we're just going to put it on the outside. Once again, these two do not mean debits and credits. So this isn't a credit over here.

This just means that we don't need a subgroup in the terms of revenue because there's only one revenue account. So once again, it's a credit here, I don't want to credit over here so I'm going to put a negative and then click on this 36 eight to flip the sign. Now, all the other accounts on the income stream Our expenses. So we're going to go over here and I'm going to make a subcategory because we have a lot of expenses. And put a colon, like we traditionally do when we have a subcategory. And then we're going to put all these sub these expenses underneath.

Now note that a lot of companies, we're going to have more accounts on the trial balance, then we may have over on the financial statements, and it's our job to group those in a logical way on the financial statements. In this case, of course, there's so few accounts, we're just going to copy them all over onto the financial statement. So I'm just going to highlight all these salaries expense, rent expense, supplies expense, depreciation expense, insurance expense, miscellaneous expense, let go right click and copy. I'm going to put that right underneath the expenses here, right click, going to paste it 123 once again, and you'll note that the indentation is already there, because the cells were formatted already. That happened because if we if we do that, we will decrease the indentation and increase the indentation like so. So we're indicating that there's a subcategory by the colon and then By the indentation and then by bringing them to the inside column, this is not the debit side of the column.

This just means that it's a subcategory. And we're going to say this equals this eight oh, for salaries equals the 16. For the rent equals the eight one for supplies equals the 334 depreciation equals the 300 and equals the 950. Could we have done that in a more quick way using Excel, we could have I'm going to delete these, we're going to say use the autofill. We're just going to copy and paste the formula. So I'm going to autofill it down by putting our cursor right there.

So it looks like that. And then autofill down auto drags it down. Dr. Phil does calculations and we have the numbers here. So and once again, it does that because of the relational formula of the cells. And so you want to get used to that in Excel. It takes a little while but very handy to have that.

So then we're going to say that total expenses are going to be on the outside and once again, it already ended. For us over here, that's going to be in the home tab, alignment. These are the indentation groups. And we're going to sum that up on the outside. Now, once again, we only do things on one column at a time. So we're not going to jump from here to here, we're only going to sum up this column on the cell with equals s, UM, and we're going to take the ad down to the 950, and enter.

So there we have it, if I highlight again, I can see the 12 six 160. In the taskbar, we could highlight here and see if the 12 160 here, we have now found a home for all of these. And so now the bottom line on the income statement is called net income. And we calculate net income as revenue minus expenses, which should be this 24 640. And so let's do that equals the 36 eight, just going to point to J 20 minus V 12 168. Enter, we get the 24 640 equaling this number here, if I highlight these, that's the 24 640.

Now you can see it's yellow, because we're going to take that and we're going to use that in our statement of owner's equity. The only two accounts that we haven't yet found a home for, other than grouping it into this number here are the capital and the draws. So now we're going to take that into consideration. And we're just going to use this number to recalculate this whole number here being 56 940 that we have in the capital account on the balance sheet. So the statement of owner's equity is also a timing statement. So I'm gonna just copy this, paste it down here, it's going to be for the month ended, may 31.

And what we're going to have here is we're going to have the capital accounts, I'm going to copy the capital account, paste it 123 but we're going to show the timing of the capital counts. Remember this capital count represents the beginning capital account. This is the capital account before we plug all this stuff into it before we close out the temporary accounts to this account. So I'm going to put this on the outside, or we're going to call this the capital account as of the beginning of the period of may 1, two oh x one, and we'll put that outside, I'm going to put negative two, flip the sign, point to that 42, three and Enter. Now, our capital account is going to increase by the bulk of the stuff the whole income statement, which we already calculated and crunched it down to one number, that one number 24 640 been on the income statement in the form of net income.

So we're going to increase this by net income. And that's going to equal I'm just going to point to this 24 640 and enter. So that's where the income is. Now all of this is included in our statement of owner's equity in the form of one number For six for you as net income, then the only account we haven't accounted for we accounted for this now is draws. So now we got to take that draws. Notice it's a debit balance and the credits when here if I highlight all these credits when 56 940 on the credit side, that 10,000, then is decreasing the winning credit side, so it needs to be a decrease.

That also makes sense, of course, because this represents the amount of money owed to the owner, and the drawls represent the owner taking money out, therefore this number needs to go down by draws. So I'm going to represent it going down by saying less draws. And so I'm going to say equals and point to that 10. And I'm not going to put a negative number there, I'm just going to call it less draws it to show that it's a subtraction problem, and then we have an increase in all owner's equity. And it kind of should be called a net increase, but oftentimes just called an increase. Why is it a net increase, because we're going to take this sub category, these two numbers and pull it out to this side.

And this numbers increase in equity, this numbers decrease in equity. Therefore, there's basically a net increase over the time period of equals that 24 640 minus the 10 here and enter. All right, and that accounts of course, for this, all this information 14 640 there it is there. Then we're going to add these up to come up with the owner capital account. I'm just going to delete this we're going to take the capital account again. But now the capital account is going to be as of the end of the period, which is may 31.

Two x one and so now we're going to go ahead and add these up when you use this function to do so equals the sum of the 42 three plus 214 640 gives us the 56 940. If I highlight these two Taskbar 56 940, we highlight all the blue, we see that we get a credit of 56 940. So this is correct, we've just flipped the sign now to be a plus and minus format, and we see it's yellow. So we should be able to see that somewhere else, that somewhere else is here. So that 56 940 needs to match here, we could tie it out for sure by deleting it there. And so notice where that number is coming from, it's there, it's coming from the blue area.

But and you can also see that from these little guys up here, and those are located in the formula group in the formula tab, formula auditing group and here they are, and then we can also delete that and if we want to show that in this format say that this should be equal to This number here and Enter. And once again that'll be make us in balance. So now, just to sum this up the assets of course should equal the liabilities plus equity. The equity here should be coming from the statement of owner's equity or tie out to the statement of owner's equity. And the statement of owner's equity includes the income statement, which is calculated, I'm sorry, includes net income, which is calculated on the income statement here, and that's how the financial statements will be tied out. The actual accounting equation is of course the balance sheet