by David Bazile
Hello Kathy, hope all is going well for you. Now to my question. For the retail business that I work for as the bookkeeper I have to create financial statements. This week the business was awarded a few investors. How do you produce financial statements using the bank statements and receipts? Do you have to journalize the transactions, then create a trial balance and so forth? I understand the process of doing it but because of the bank statement I'm a little unsure.
You can create Financial Statements from your bank statements, but it's easier to use the actual documents - meaning the cash receipts and the check stubs. The cash receipts are your Sales, and the check stubs would represent your Expenses and any Balance Sheet items like principal payments on loans, any owner contributions or withdrawals, etc.
Then add in bank fees and any automatic payments/receipts from your bank statements, and you should have everything you need to make Financial Statements.
Technically, the process is to make journal entries, post to your ledger, then prepare a Trial Balance and then Financials. But...if you don't have a ledger, you should at least use some kind of journals, like Cash Disbursements and Cash Receipts. These summarize your transactions by month and you can keep these as backup. But...(again) when I worked for a CPA firm, small business owners would bring us check stubs and bank statements (for cash receipts and bank fees) and we would make the journal entries from that, then our computer system would post and prepare Financials from the entries.
If you're doing it by hand, summarize your receipts and your disbursements. Then separate Income Statement items and any Balance Sheet items. Then prepare your Financials.
If you need help with the form of Financial Statements, look on my navigation panel to the left and click on Financial Statements.
Hope that helps!