From the course: Excel for Finance: Building a Three-Statement Operating Model

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Building the bonus accrual

Building the bonus accrual - Microsoft Excel Tutorial

From the course: Excel for Finance: Building a Three-Statement Operating Model

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Building the bonus accrual

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- [Lecturer] Okay, so in this video, I'm going to introduce you to one of my favorite modeling conventions called the Corkscrew Convention. And we're going to use it to model out the bonus expense. So let's head up to our balance sheet and see what we're working with. First things first, last little bit of cleanup from our last video. Let's just update our note here, for all of these current assets and current liabilities to be See Networking Capital Schedule. Get rid of those, paste that here and then here as well, for the Accounts Payable and the Accrued Expenses. And now let's take a look at the Bonus Accrual. So what we're modeling here is we're taking an accrued expense in bonus all year long but we're actually not paying it until a specific point in the year. And the CFO has said we're going to be paying it in December. So we're adjusting the expense and the income statement to correctly reflect the cash. And so…

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