please help urgent

please help urgent

Didn't find your answer?

I know this may sound like a really stupid question, but can someone help me construct a balance sheet with these figure.
Sole Trader, no separate bank account, first years trading.

Van purchased 3300
CAs - same as depreciation per p&l 825
Creditor 325
Loss 3744 (includes 825 depreciation and creditor)
James Scott

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By tugwilson
14th Jun 2007 16:32

Balance sheet
Dont really understand question entirely, but balance sheet would appear to be: -

Van nbv 2475
Creditor -325
Total 2,150

Represented by capital account including loss, capital introduced and drawings.

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By jvenegas16
14th Jun 2007 16:37

Balance Sheet
Is there any more information?

The Balance Sheet is out of balance by £1269

Fixed assets Cost Depn NBV
Van 3300 825 2475

Current assets
Bank ?
Debtors ?

Current liabilities
Creditors (325)

Net Current Assets 2150

Financed by:

Capital ?
Profit 3744 - 325 (3419)
Less drawings ?

Net current assets £2150 =/= £3419

Out of balance.

That is the layout, but it must balance.

Regards,

Juan Carlos Venegas
[email protected]

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By AnonymousUser
14th Jun 2007 17:27

answers to question
No bank account
No debtors
The figure is a loss, not a profit - sorry if I did not make it clear.
CA which are the same as depreciation have already been deducted to get the loss of £3744 This figure also includes £200 use of home as office, so there is no actual bank transaction
I did get as far as NCA of £2150 but could not get the capital introduced, loss etc to match that figure.

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By User deleted
14th Jun 2007 18:19

.
Is this home work James?

From the info provided you have already had your answer.

As this is a first year without details of any bank/cash balances and drawings or capital introduced it is not possible to finish your balance sheet.

Why bother with a balance sheet, if it is a small client leave it at the P&L?

Jason
Holden Associates
The Small Business Blog

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David Winch
By David Winch
14th Jun 2007 18:42

Oh dear!

Looks like you forgot the cash account!! You need to reflect the closing cash in hand, and the drawings / capital introduced as a balancing figure in the cash account (if you have no further information).

If this really is a business and there are no records then you need to make the client aware of the risks of failing to maintain adequate records.

David

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By hallsi
14th Jun 2007 19:05

creative accounting....
let's assume £100 stock, £500 cash in hand, accrual for preparing balance sheet £150 at y/e

Fixed Assets £2,475

Stock £ 100
Cash £ 500

Creditors £ 325
Accruals £ 150

Net Assets £2,600

Capital Intr £6,344*
Loss ( £3,744)
Drawings £ Nil

Total Cap Emp £2,600

* effectively balancing figure of money used out of private account in excess of income less expenses.

why is Capital Allowance same as depreciation? FYA apply surely.

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By Richardrussell
14th Jun 2007 20:39

Why don't you

go back to first principles and use debits and credits?

You know (surely?) that each debit has a corresponding credit.

So the van cost £3,300 - what's the credit? Loan? HP creditor? Capital introduced? Cash account?

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By JackJoshua
15th Jun 2007 00:34

Solution
If you are going to claim a capital allowance for the van, then why not claim 50% FYA instead of just 25%?

The difference in the balance sheet will be capital introduced being money that the proprietor has paid out of his pocket to keep the business going (i.e. for the van and the loss for the year)

Capital Introduced

Van 3300
Loss 3744
Less: Dep'n (825)
Less : Creditor (325) - As not yet paid obviously

Total 5894

Hope this helps.

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By AnonymousUser
15th Jun 2007 10:08

more
I think I got as far as this, but maybe I am trying to make things more complicated than they should be.
Can you claim FYA of 50% on a van.
I thought it was restricted to plant and machinery.
The CA will increase the loss.
Can you relate this increased loss back in the same way as the original loss.
Thanks again.

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By Richardrussell
15th Jun 2007 10:52

Accounting and tax treatment

You want help preparing a balance sheet. For the accounts, I guess you would put through dep'n at, say, 25%.

Balance sheet done.

Then for tax purposes, you add back the dep'n and claim capital allowances.

You CAN claim 50% FYA on a van, it is classed the same way as P&M.

You were worried about the loss; the loss in the accounts (accounting loss) is, as explained above, different from the loss for tax purposes.

For CA's you don't have to claim the FYA if you don't need it/want to, but that is your call. Your client's other circumstances should be taken into account.

Are you doing this with the intention of then reviewing with your client, or will this be passed to someone else for review? I don't want to sound rude, I'm just thinking about your client's best interests.

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By AnonymousUser
15th Jun 2007 11:38

Balance Sheet
Also note that Depreciation will appear in the top half of the balance sheet.

FYA and CAs will NOT appear in the BS, these are a separate adjustment to taxable profit.

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By martinfoley07
15th Jun 2007 12:25

James, I am assuming....
...you are the sole trader, and that as a small start up with (likely) losses you consider it financially better to try DIY rather than go to the expense of hiring an accountant.

It is possible this may be a good tactic for your first year if you are really cash strapped. But please do not discount the idea of speaking to a couple of local, reputable accountants ; most will offer a free initial meeting and give you free advice on the general issues you are wanting help on. Many may also help you polish off the simple S.E. tax return for free (using your figures, without further work thereon) on the understanding you would go back to them should your business prosper, or charge a very small sum under the circumstances.


(if my assumption is wrong, and you are doing someone else's tax return and accounts for them - no words would be adequate).

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By JackJoshua
16th Jun 2007 01:10

In agreement
As previously noted you can claim the 50% FYA on the van, but if you had a purchased a car you would only have been able to claim 25% which is where the confusion has probably arisen.

It tends to be if you have made a loss and have no other income in the year then you should claim as much capital allowance as possible to increase your loss to bring forward in future years. If you have a profit of say under 5k it is best not to claim a capital allowance at all as it will be wasted (note for future years)

I have to agree with an earlier post, that you may be better off getting advice from a professional. There may be items in your P & L A/C that you should not be claiming for and also stuff that you could claim that you are not aware of - for example do you know you can claim at least £2 per week as a use of home allowance? Have you also adjusted your CA for any private use with your van?

The main concern will be if you use your loss relief in future years to your best advantage, as that could potentially cost you hundreds of pounds.

Again, as posted earlier if you are actually an accountant providing this service with the knowledge you have then with all due respect I would not do the job. I understand the extra money is good as I have been there myself but so many clients sue accountants nowadays for thousands that it probably is not worth the risk to you.

Finally ditch the balance sheet from your accounts. I assume you don't need it, the Revenue don't require it and it will only serve to provide you with headaches in the future. Just remember to bring in your opening creditor next year.

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By User deleted
16th Jun 2007 10:26

Just to reinforce
Jonathan's comments, losses in the first year of trading can actually be carried back against employment income from previous years (particularly useful for a HR tax payer), so it would be a good idea to get some professional advice. More so as you are 'dabbling' in capital allowances and losses.

And correct, you are under no obligation to complete a balance sheet (which is why previously I assumed you were acting FOR a sole trader, rather than you BEING the sole trader).

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By Chris Smail
17th Jun 2007 13:12

If you cannot do this then-
1 This is homework, in which case go and read your books again

2 You have just set up in business, in which case you should talk to a local qualified accountant who will not charge very much for elementary stuff like this and will leave you free to make some money. You could also consider a basic bookkeeping course as well.

3 You are trying to do it for somone else, in which case look to your insurance.

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