[MUSIC] Okay, so we've looked at the balance sheet, we've looked at the cash flow and we've looked at the income statement for GENIUS. Let's develop the solution and let's develop a complete balance sheet at the end of the year for this particular company. Okay, if you can recall, the equity, the capital that was invested, 100 shares at 1 pound each, so 100 pounds worth of equity. And what we'll add to that equity is the retained earnings kept within the company. And this will be the retained earnings after they're paid the dividend. And this was the 2 pounds, so the total equity retained within GENUIS is 102 pounds. Let's have a look at those liabilities and we'll start with the non-current liability of the bank loan, pretty straightforward. GENIUS took out a bank loan for 50 pounds, doesn't have to be paid back for another five years, so it's a non-current liability. And now, finally, for this section, let's have a look at the current liabilities. We've got some trade creditors and if you can recall, the trade creditors of the purchases that have yet to be paid for. The question clearly stated that 10 pounds was still owing to our suppliers, our trade creditors. So we have a current liability of trade payables, trade creditors of 10 pounds and the final one is the tax. Just because we haven't paid it doesn't mean to say that it doesn't belong in this liability section. We still owe it, and therefore, the tax of 3 pounds gets added to your current liabilities. This gives you a total current liability figure of 13 pounds, so we have total equity of 102. We have total non-current liabilities of 50 and total current liabilities of 13. If we add all of those up, they come to 165 pounds. So if you can recall, our assets equal our equity plus our liabilities. So our assets should, if the theory works, add up to 165 pounds. Well let's have a look and see if they do. So we'll start with the equipment, the non-current asset of equipment. This costs us 50 pounds but if you can recall we charge depreciation of 10 pounds as an expense in the income statement. And therefore to reflect that wear and tear, to reflect the spreading of the costs of the asset over its 5 year life, it's no longer worth 50 pounds at the end of the first year, it's worth 40 pounds. A simple calculation is the cost less the depreciation. So the cost was 50, the depreciation was 10 and therefore it has a value in the books of 40 pounds often referred to as carrying value or net book value. Okay, that's our non-current assets. What about our current assets? Well, do we have any inventory that we haven't sold? Yes, we didn't sell all of the inventory, remember, we only sold 80% of it. We purchased 50 pounds worth of inventory and our cost of sales were 40 which means there's still 10 pounds worth of inventory that's sitting in the business unsold. Are we owed any money from our sales? Remember, these were credit sales and not all of the money has been collected in. And if you can remember, we made 80 pounds worth of sales, and we were still owed 20. So therefore, we have a current liability of debtors, or trade receivables, of 20 pounds. And the final figure to go in here of course, is taken straight from the Cash Flow statement. Your asset of cash, your current asset of cash, and straight from the Cash Flow statement, that calculated out at 95 pounds. So we've got 40 pounds worth of non current assets. We've got 10 pounds worth of inventory, 20 pounds worth debtors, and 95 pounds worth of cash, giving us a total current liabilities of 125. Add that to the 40 pounds worth of non-current assets and you've got 165 pounds of total assets equal to your total equity plus your total liabilities. And the balance sheet balances. [MUSIC]
