Hey guys,
I recently took a modeling exam the other day and before I got to finish it my balance sheet would not balance. I hid the prompt as I don't want anyone that works there to find out who I am. I would love some help with this model. I kind of know what went wrong as there is a 150 difference which is caused by new shares being issued. The problem is, I don't get why it starts at Y+2 and not Y+1. Would anyone mind helping me out on this? I would really appreciate it.
| Attachment | Size |
|---|---|
| practice_model.xls 76 KB | 76 KB |
You’ve captured the issuance of new shares in the cash flow statement as cash in but it appears you are not including it in your equity in the balance sheet.
I think APIC in your example should be $300 in the the first year it’s out of balance
Debit: cash $150 Credit: Equity $150
Sorry I'm confused. It is getting captured. If i increase APIC to $300 then the first year goes -150 on the balance check. Would you mind doing it on the file please?
In 2018 you issued new shares for 150 and you did the same in 2019. APic is a cumulative balance so in 2019 you need to add the cash’s flow amount to the prior year balance giving you $300 in 2019, $450 in 2020 etc. that should fix it.
Oh God, I am an idiot. Thank you so much!
i fixed it for you how do i upload a file or is it easier to explain?
I'll just explain, you are not taking the prior periods APIC into account in your projection. so starting in cell j60, it should not simply link to the new APIC, but add the APIC from the prior period to the additional APIC from the CFF section. it will balance. cell j60 should = (j89+I60)
Oh wow, I feel so stupid. Thanks a lot man I really appreciate it!
Eaque ducimus necessitatibus molestiae sit eos ex. Itaque quia nihil et sunt sit saepe. Eveniet est labore nihil porro corporis.
In est rerum ullam dolor est temporibus eveniet. Aut ex vel consequatur sint fuga quia ex. Rem cum alias temporibus cupiditate.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...