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Directors loan account in credit and P&L

Hi,

I’m looking at annual accounts for a small company where the directors loan account is in credit (company owes directors).

1) As the accounts currently stand, the company is due to make a profit.

However, the amount that the company owes the directors is much more than the profit would be.

- How can some of the loan be moved from the balance sheet and have an entry in the P&L?

- Can it be included as an item somewhere in the P&L?

2) Also, with the directors’ salary, they didn’t withdraw the whole salary due for the year from the bank.

The half which they did withdraw from the bank is already in the admin expenses. How to account for the salary still owing at the end of the company’s financial year?

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20th Sep 2011 12:58

Basic stuff

This seems rather straightforward, so I may be missing the point, but:

No part of the DLA can be can be moved to the P&L, unless the director is talking about writing off part of his loan.  The company could have paid interest, subject to deduction of 20% income tax, under the quarterly CT61 procedure; if that was not done in the year, you could accrue for interest in the P&L and credit the DLA.Salaries should be charged to the P&L when processed and if not actually drawn at the time, credited to the DLA.

Thanks (1)