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Anyone have any good resources for creating pro forma statements?

I can't seem to get my balance sheet to tie out between equities and liabilities (and it's been a decade since I've taken Financial Accounting :)

I bastardized my pro forma I'm working with now just to get the point across, it is here:

https://spreadsheets.google.com/ccc?key=t3_tQugo8S_eu_aC9ZYdDBg&authkey=CNKVzq8B#gid=3

A couple questions on this:

  • Balance Sheet - under Equity, if I am expecting or aiming for investment, do I just cumulatively add that up? in other words if we have 2000 in equity Year #1 as an investment, and then we get a $1,000,000 round of funding, do I just end up with $1,002,000 for equity?
  • Balance Sheet & Income Statement - are these retained earnings numbers supposed to match?
  • How do I handle negative (loss) on the income statement in terms of Tax expense and
  • Fixed asset purchases / capital expenditures dont show up on the Income statement, correct?

Thanks. It's driving me crazy since I think I'm close to getting this wrapped up but I just can't seem to get it tied out.

Please: Ignore the actual numbers there. I changed all of them for the purposes of posting this. I just think I'm missing something in terms of getting it all to tie out.

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1 Answer

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Nick, answers to some of your question:

  • Balance Sheet/Equity - Assuming that your investment is in the form of stock (not a convertible note) and this is an S-Corp or C-Corp you would add this to capital stock. Technically, if the stock has a nominal par value (say $0.01/share) you would have two entries. First would be "Capital Stock" at the par value. The excess capital paid in would be "Additional Paid-in-Capital in Excess of Par". Example: $100,000 investment for 10,000 shares at par value $0.01/share. You would book $100 as Capital Stock and $99,900 as Additional Paid-in-Capital.
  • Retained Earnings - Income statement profit/loss will only match retained earnings on the balance sheet in year 1. Afterwords, it would be cumulative. So if you had $100,000 loss in year 1 and made a $300,000 profit in year two. At end of year 1, retained earnings would be -$100,000 and at end of year two would be +$200,000.
  • Loss relative to taxes - not quite sure I understand question. I think you're asking what happens to the loss? If you lose money, no taxes are due and depending on your tax treatment, you may be able to carry forward the loss to offset future year profits which in turn reduces taxes.
  • Fixed asset/capex - correct, not on the income statement. Would be assets on the balance sheet.

Hope this helps.

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Thanks, that's exactly what I needed to know. Appreciate the help! – Nick Mar 30 '11 at 21:12

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