prepare the current year-end balance sheet for armani company

Daniel Parker

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28-02-2025

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Preparing the Year-End Balance Sheet for Armani Company

This article guides you through preparing a year-end balance sheet for a fictional company, Armani Company. We'll cover the key components, demonstrate the process, and highlight best practices. Remember, this is a simplified example; a real-world balance sheet would require more detail and potentially professional accounting assistance.

Understanding the Balance Sheet

A balance sheet is a financial statement that provides a snapshot of a company's assets, liabilities, and equity at a specific point in time (in this case, the year-end). The fundamental accounting equation underpins it:

Assets = Liabilities + Equity

This equation always balances. Let's define each component:

• Assets: What the company owns (e.g., cash, accounts receivable, inventory, property, plant, and equipment).
• Liabilities: What the company owes to others (e.g., accounts payable, loans payable, salaries payable).
• Equity: The owners' stake in the company (assets minus liabilities). For a corporation, this includes retained earnings and contributed capital.

Example: Armani Company Year-End Balance Sheet (December 31, 2023)

Let's assume the following data for Armani Company as of December 31, 2023:

Assets:

• Current Assets:
  • Cash: $50,000
  • Accounts Receivable: $20,000
  • Inventory: $30,000
  • Prepaid Expenses: $5,000
• Non-Current Assets:
  • Property, Plant, and Equipment (Net): $100,000

Liabilities:

• Current Liabilities:
  • Accounts Payable: $15,000
  • Salaries Payable: $8,000
  • Short-Term Loan Payable: $10,000
• Non-Current Liabilities:
  • Long-Term Loan Payable: $40,000

Equity:

• Common Stock: $50,000
• Retained Earnings: $42,000

Armani Company Balance Sheet December 31, 2023

Key Considerations:

• Accuracy: Ensure all figures are accurate and based on reliable data.
• Classification: Properly categorize assets and liabilities as current (due within one year) or non-current.
• Net Book Value: Property, Plant, and Equipment is usually shown at net book value (original cost less accumulated depreciation).
• Professional Advice: For complex financial situations, consult with a qualified accountant.

This example demonstrates the structure and components of a year-end balance sheet. By diligently collecting and organizing financial data, you can create a clear and accurate representation of Armani Company's financial position. Remember to adapt this template to your specific company's circumstances and accounting practices.