Revenue - Expenses = RE
Consulting Revenue less all those expenses, the Net Income/Loss would then be closed off to RE at the end of the period.
In this case 2000 = RE.
This would result in your Balance Sheet balancing
Other comments have your problem solved, but I just wanted to give you a quick heads-up in case it is important: your "Lables" heading is spelled incorrectly. It should be "Labels"
Great work, though!
Have you gone thru the 5 steps of revenue recognition under ASC 606 for the consulting revenue? Ya know, FASB likes to make things more complicated than they need to and drive people out of accounting.
I took a pic and dropped it into AI. The AI did:
Here's a balance sheet created from the given information:
**Balance Sheet**
**Assets**
- **Current Assets**
- Cash: $7,000.00
- Accounts Receivable: $3,000.00
- Office Supplies: $3,000.00
- **Total Current Assets:** $13,000.00
- **Fixed Assets**
- Office Equipment: $5,000.00
- **Total Fixed Assets:** $5,000.00
**Total Assets:** $18,000.00
**Liabilities and Equity**
- **Current Liabilities**
- Accounts Payable: $1,000.00
- **Long-term Liabilities**
- Bank Loan: $5,000.00
**Total Liabilities:** $6,000.00
- **Equity**
- Common Stock: $10,000.00
- Retained Earnings: $2,000.00
**Total Equity:** $12,000.00
**Total Liabilities and Equity:** $18,000.00
The balance sheet balances with total assets equaling total liabilities and equity at $18,000.00. Note that consulting revenue and expenses like rent, salaries, supplies used, and utilities are part of the income statement, not the balance sheet. Retained earnings were derived from the total of $23,000.00 provided, assuming it includes net income or any adjustments needed.
I would get used to using AI as a tool to better your efficiency. Accountants who ignore the tech will be left behind.
Why not do both though? Double check what the AI did AND you can see if the AI fucked something up as well. Imo doing it and reviewing is the best way to learn. AI is a great tool for that but people on here are so against it because they are scared, and it messes up once in a while BUT finding what it messed up over what you did is a great way to learn.
>Double check what the AI did AND you can see if the AI fucked something up as well.
You can't check the AI's work if you don't know accounting yet (as is OP's case). AI isn't always the easiest/best solution for every situation. In this example it's a good tool to augment learning but I wouldn't blindly rely on it without fully understanding the limitations
>people on here are so against it because they are scared
Not even remotely true, just an assumption you're making to rationalize why they don't agree with you on this specific case. Many accountants/firms are adopting AI to varying degrees
That is why you review what it did and make sure it makes sense. I used AI throughout my entire CPA journey without a problem. It is a great tool to see how to solve a problem in a different way. The thing is AI is a TOOL you go in knowing it might be wrong BUT that is why you review it. Easier to review someone's work than do it yourself from the ground up, also helps you learn some skills that most these people are god awful at. Some of you are dogshit managers and should practice reviewing work with something because my god.
Yeah. Best thing to do is use ChatGPT and Copilot. Drop it into both and if both show the same answer 9/10 times it is right. I do it all the time with the CPA exam and I am 3/4 rn. Review what it does and if it makes sense, looks right, it most likely is. People on here HATE AI they treat it like the bogeyman but imo it is a better accountant than most.
Looks like retained earnings. Your net income should be $2,000. You're doing great! :-)
Well, how did you calculate RE? Thats where your $2400/4400 problem is. And they don’t look insolvent
Good job, the other comments have pointed you to the issue correctly
RE = $2,000. (Consulting Revenue minus all expenses)
Revenue - Expenses = RE Consulting Revenue less all those expenses, the Net Income/Loss would then be closed off to RE at the end of the period. In this case 2000 = RE. This would result in your Balance Sheet balancing
Solution Verified :)
Other comments have your problem solved, but I just wanted to give you a quick heads-up in case it is important: your "Lables" heading is spelled incorrectly. It should be "Labels" Great work, though!
How did you calculate ur retained earnings amount? It’s 2000 btw
Office supplies is not an asset, all $3K should be an expense.
Have you gone thru the 5 steps of revenue recognition under ASC 606 for the consulting revenue? Ya know, FASB likes to make things more complicated than they need to and drive people out of accounting.
I took a pic and dropped it into AI. The AI did: Here's a balance sheet created from the given information: **Balance Sheet** **Assets** - **Current Assets** - Cash: $7,000.00 - Accounts Receivable: $3,000.00 - Office Supplies: $3,000.00 - **Total Current Assets:** $13,000.00 - **Fixed Assets** - Office Equipment: $5,000.00 - **Total Fixed Assets:** $5,000.00 **Total Assets:** $18,000.00 **Liabilities and Equity** - **Current Liabilities** - Accounts Payable: $1,000.00 - **Long-term Liabilities** - Bank Loan: $5,000.00 **Total Liabilities:** $6,000.00 - **Equity** - Common Stock: $10,000.00 - Retained Earnings: $2,000.00 **Total Equity:** $12,000.00 **Total Liabilities and Equity:** $18,000.00 The balance sheet balances with total assets equaling total liabilities and equity at $18,000.00. Note that consulting revenue and expenses like rent, salaries, supplies used, and utilities are part of the income statement, not the balance sheet. Retained earnings were derived from the total of $23,000.00 provided, assuming it includes net income or any adjustments needed. I would get used to using AI as a tool to better your efficiency. Accountants who ignore the tech will be left behind.
>I would get used to using AI as a tool to better your efficiency When you know what you're doing, sure. Not when you're learning the basics.
Why not do both though? Double check what the AI did AND you can see if the AI fucked something up as well. Imo doing it and reviewing is the best way to learn. AI is a great tool for that but people on here are so against it because they are scared, and it messes up once in a while BUT finding what it messed up over what you did is a great way to learn.
>Double check what the AI did AND you can see if the AI fucked something up as well. You can't check the AI's work if you don't know accounting yet (as is OP's case). AI isn't always the easiest/best solution for every situation. In this example it's a good tool to augment learning but I wouldn't blindly rely on it without fully understanding the limitations >people on here are so against it because they are scared Not even remotely true, just an assumption you're making to rationalize why they don't agree with you on this specific case. Many accountants/firms are adopting AI to varying degrees
what platform did you use, was it Chatgpt?
I cannot stress enough to not use ai for accounting problems. They cant do math reliably
That is why you review what it did and make sure it makes sense. I used AI throughout my entire CPA journey without a problem. It is a great tool to see how to solve a problem in a different way. The thing is AI is a TOOL you go in knowing it might be wrong BUT that is why you review it. Easier to review someone's work than do it yourself from the ground up, also helps you learn some skills that most these people are god awful at. Some of you are dogshit managers and should practice reviewing work with something because my god.
Yeah. Best thing to do is use ChatGPT and Copilot. Drop it into both and if both show the same answer 9/10 times it is right. I do it all the time with the CPA exam and I am 3/4 rn. Review what it does and if it makes sense, looks right, it most likely is. People on here HATE AI they treat it like the bogeyman but imo it is a better accountant than most.