Example Balance Sheet Calculation

Let’s assume a fictional company, Adwoa & Daughters Ltd, has the following assets and liabilities as of December 31, 2023:

Assets:

Cash: GHS10,000

Accounts Receivable: GHS5,000

Inventory: GHS15,000

Equipment: GHS30,000

Total Assets = GHS10,000 (Cash) + GHS5,000 (Accounts Receivable) + GHS15,000 (Inventory) + GHS30,000 (Equipment) = GHS60,000

Liabilities:

Accounts Payable: GHS8,000

Bank Loan: GHS12,000

Total Liabilities = GHS8,000 (Accounts Payable) + GHS12,000 (Bank Loan) = GHS20,000

Shareholders’ Equity:

Assuming shareholders’ equity (which represents the ownership interest in the company) is GHS40,000.

Now, let’s verify the balance sheet equation:

Assets = Liabilities + Shareholders' Equity

GHS60,000 (Total Assets) = GHS20,000 (Total Liabilities) + GHS40,000 (Shareholders' Equity)

Therefore, the equation balances correctly:

GHS60,000 = GHS20,000 + GHS40,000