How to Make Net Income Financial Statements

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How to Make Net Income Financial Statements

How to calculate when you have net income instead of net loss

Beverly Lee

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Step 1 of 25

In the income statement, calculate the variable by adding the 2 known numbers or subtracting them. Which one works in the equation?

Step 2 of 25

If you add and plug you get (-500 - a loss) and we have a gain so try the other operation and plug.

Step 3 of 25

See? It doesn work.

Step 4 of 25

This might be it...

Step 5 of 25

Let's try it.

Step 6 of 25

500 in the blank...

Step 7 of 25

The equation is correct and 4,500 is the plug figure.

Step 8 of 25

We know the net income figure from the income statement so let's plug it in where it goes on the cap statement. Look for a line with the same name.

Step 9 of 25

Plug it in. Will this figure drain (reduce) cap or grow (increase) it? Will you add it to capital, beginning or subtract it?

Step 10 of 25

You may skip the net figure calculation for now. Does owner withdrawals increase or decrease cap? Add or subtract?

Step 11 of 25

Net income GROWS our cap and owner withdrawals DRAIN our capital. Our calc is beginning + net income - withdrawals = cap, ending. 4,000 + 500 - 250 = 4,250 ending cap.

Step 12 of 25

Capital, ending = 4,250. Prepare to plug this figure into the balance sheet below. Left side or right?

Step 13 of 25

Find the line in the balance sheet on the right side with the same title.

Step 14 of 25

Plug the capital, ending figure. Now you have the equation on the right side of the balance sheet L + C = Total L + C. L + 4,250 = y. We need a way to determine at least one of the variables. Assets!

Step 15 of 25

Add up the assets.

Step 16 of 25

A = 7,300 so (L + C) = 7,300 also. Plug it in!

Step 17 of 25

Now! Plug!

Step 18 of 25

Now we know x + 4,250 = 7,300. Calculate the variable and plug to confirm. What did you get??

Step 19 of 25

7,300 - 4,250 = ??

Step 20 of 25

Well?

Step 21 of 25

Right! 3,050. Plug back in to the equation: 3,050 + 4,250 = 7,300. Check? Check ! Now to figure the "other" liability. We owe Office Mart 1,000 and we owe a total of 3,050. Add or subtract?

Step 22 of 25

Try both and plug to check your calculation.

Step 23 of 25

Did you get 2,050 for Bluebonnet? Total Liabilities -Office Mart = Bluebonnet. 3,050 - 1,000 = 2,050. Plug that in the Bluebonnet box.

Step 24 of 25

All that's left is to calculate the box we skipped earlier on the cap statement. Ending capital balance - beginning capital balance = net increase or decrease. Did our cap increase or decrease?

Step 25 of 25